F-1 1 a2232195zf-1.htm F-1

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As filed with the Securities and Exchange Commission on July 6, 2017.

Registration No. 333-          

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



Zealand Pharma A/S
(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant's name into English)

The Kingdom of Denmark
(State or other jurisdiction of
incorporation or organization)
  2834
(Primary Standard Industrial
Classification Code Number)
  NOT APPLICABLE
(I.R.S. Employer
Identification Number)

Smedeland 36
2600 Glostrup (Copenhagen)
Denmark
+45 88 77 36 00

(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)



CT Corporation Systems
111 Eighth Avenue, 13th Floor
New York, NY 10011
Telephone: (212) 894-8940
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

Kristopher D. Brown
Patrick Lyons
Jonathan A. Schur
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036
Telephone: (212) 698-3500
Facsimile: (212) 698-3599

 

Divakar Gupta
Charles S. Kim
Joshua A. Kaufman
Cooley LLP
The Grace Building
1114 Avenue of the Americas
New York, NY 10036
Telephone: (212) 479-6000
Facsimile: (212) 479-6275



Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

           If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

           If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging Growth Company    ý

           If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act.    o


The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

CALCULATION OF REGISTRATION FEE

       
 
Title of each class of securities
to be registered

  Proposed maximum
aggregate offering
price(1)

  Amount of
registration fee(2)

 

Ordinary Shares, DKK 1 nominal value per share(3)

  $86,250,000   $9,997

 

(1)
Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rules 457(o) under the Securities Act of 1933, as amended. Includes the ordinary shares that the underwriters have the option to purchase to cover over-allotments, if any.

(2)
Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

(3)
American Depositary Shares, or ADSs, issuable upon deposit of the shares registered hereby will be registered pursuant to a separate registration statement on Form F-6. Each ADS represents one (1) ordinary share.

           The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any U.S. state or other jurisdiction where the offer or sale is not permitted.

Subject to Completion, Dated July 6, 2017

American Depositary Shares
Representing                   Shares

LOGO

Zealand Pharma A/S

This is an initial public offering of American Depositary Shares, or ADSs, representing                   shares of Zealand Pharma A/S. All of the ADSs are being sold by us. Each ADS represents one ordinary share of Zealand Pharma A/S of nominal value Danish kroner, or DKK, 1.

Currently, our shares are traded on Nasdaq Copenhagen A/S, or Nasdaq Copenhagen, under the symbol "ZEAL." The closing price of our shares on Nasdaq Copenhagen on                   , 2017 was DKK                   per share, which equals a price of $               per ADS based on the U.S. dollar/DKK exchange rate as of                   , 2017. We have applied to list the ADSs on The NASDAQ Global Select Market, or NASDAQ, under the symbol "ZLND."

We are an "emerging growth company" as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings.

Investing in the ADSs involves a high degree of risk. See "Risk Factors" on page 14 to read about factors you should consider before buying the ADSs.

None of the Securities and Exchange Commission, any U.S. state securities commission, the Danish Financial Supervisory Authority or any other foreign securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 
 
Per ADS
 
Total

Initial public offering price

  $                      $                   

Underwriting discounts(1)

  $                      $                   

Proceeds, before expenses, to us

  $                      $                   

(1)
We refer you to "Underwriting" section beginning on page 180 for additional information regarding total underwriting compensation.

The underwriters may also exercise their option to purchase up to an additional                  ADSs from us to cover over-allotments, at the same price per ADS as paid for the ADSs offered hereby, for 30 days after the date of this prospectus.

The underwriters expect to deliver the ADSs against payment through the facilities of The Depository Trust Company on                           , 2017.

Morgan Stanley   Goldman Sachs & Co. LLC

   

                           , 2017


TABLE OF CONTENTS

 
  Page  

Prospectus Summary

    1  

Risk Factors

    14  

Special Note Regarding Forward-Looking Statements

    57  

Market, Industry and Other Data

    59  

Use of Proceeds

    60  

Dividend Policy

    61  

Capitalization

    62  

Dilution

    63  

Exchange Rate Information

    65  

Market Information

    66  

Selected Consolidated Financial Data

    67  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    69  

Business

    91  

Management

    138  

Certain Relationships and Related Party Transactions

    150  

Principal Shareholders

    151  

Description of Share Capital

    153  

Description of American Depositary Shares

    167  

Shares and American Depositary Shares Eligible for Future Sale

    175  

Material U.S. Federal Income Tax Considerations

    177  

Material Danish Income Tax Considerations

    182  

Underwriting

    186  

Expenses of this Offering

    193  

Legal Matters

    194  

Experts

    195  

Enforcement of Civil Liabilities

    196  

Where You Can Find More Information

    196  

Index to Financial Statements

    F-1  

    

       

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        Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations, market position, market opportunity and market share, is based on information from our own management estimates and research, as well as from industry and general publications, research, surveys and studies conducted by third parties. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable. In addition, assumptions and estimates of our and our industry's future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors." These and other factors could cause our future performance to differ materially from our assumptions and estimates. See "Special Note Regarding Forward-Looking Statements."

        This prospectus presents market and industry data and other information from, among others sources, IMS Health Information Service, or IMS Health. IMS Health and the publishers of other sources used in this prospectus have granted us permission to reference such data and information, and each expressly reserves all rights, including rights of copying, distribution and republication. Such data and information is based on the research, analysis and viewpoints of the publisher thereof and speaks as of its original publication dates and not as of the date of this prospectus.

        This prospectus includes trademarks, tradenames and service marks, certain of which belong to us and others that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this prospectus appear without the ® and ™ symbols, but the absence of those references is not intended to indicate, in any way, that we will not assert our rights or that the applicable owner will not assert its rights to these trademarks and tradenames to the fullest extent under applicable law.

        Neither we nor the underwriters have authorized anyone to provide you with information that is different from that contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriters are offering to sell ADSs and seeking offers to purchase ADSs only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date on the front of this prospectus, regardless of the time of delivery of this prospectus or any sale of ADSs.

        For investors outside the United States: Neither we nor any of the underwriters have taken any action to permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

        In accordance with applicable Danish law, we have prepared a Danish prospectus, or the Danish Prospectus. The Danish Prospectus will be made public on, or immediately after,              , 2017. The Danish Prospectus is prepared for the sole purpose of satisfying applicable Danish securities legal and regulatory requirements in order to list the shares underlying the ADSs on Nasdaq Copenhagen. The Danish Prospectus may not be relied upon for any other purposes, including with respect to the offering of ADSs by us or any other person. Neither we, our management team, our board of directors, our employees, our advisors nor any other person accept any liability for any information contained (or not contained) in the Danish Prospectus or for any inconsistencies with the contents of this prospectus.

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PRESENTATION OF FINANCIAL INFORMATION

        We maintain our books and records in Danish kroner and report under International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. None of the consolidated financial statements in this prospectus were prepared in accordance with accounting principles generally accepted in the United States. Except with respect to U.S. dollar amounts presented as contractual terms or as otherwise indicated, all amounts that are presented in U.S. dollars herein have been translated from DKK solely for convenience at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate as of March 31, 2017, as reported by Danmarks Nationalbank. We use the symbol "$" to refer to the U.S. dollar and the symbol "€" to refer to the Euro herein.


PRESENTATION OF SHARE INFORMATION

        All references to "shares" in this prospectus refer to ordinary shares of Zealand Pharma A/S with a nominal value of DKK 1 per share.

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PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before deciding to invest in the ADSs, you should read this entire prospectus carefully, including the sections of this prospectus entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements contained elsewhere in this prospectus. Unless the context otherwise requires, references in this prospectus to the "Company," "Zealand," "we," "us" and "our" refer to Zealand Pharma A/S and its subsidiaries.

Our Company

        We are a biotechnology company focused on the discovery, design and development of innovative peptide-based medicines. Our portfolio includes two approved products for the treatment of type 2 diabetes: (i) lixisenatide, which has been approved by the U.S. Food and Drug Administration, or FDA, and is marketed in the United States under the brand name Adlyxin and which has been approved by the European Medicines Agency, or EMA, and by other regulatory authorities outside the United States where it is marketed under the brand name Lyxumia, and (ii) a combination of lixisenatide with Lantus, the brand name of insulin glargine developed by Sanofi S.A., or Sanofi, which has been approved by the FDA and is marketed in the United States under the brand name Soliqua100/33, and which has been approved by the EMA and launched in the Netherlands under the brand name Suliqua. Suliqua is expected to launch in certain other European countries beginning in the second half of 2017. Both Adlyxin / Lyxumia and Soliqua 100/33 / Suliqua are marketed by Sanofi pursuant to a license agreement granting Sanofi commercialization rights over these products. See "Business—Material Contracts—Sanofi License Agreement for Lixisenatide."

        With the FDA's and EMA's approvals of Soliqua100/33 / Suliqua on November 21, 2016 and January 17, 2017, respectively, and the FDA's approval of Adlyxin on July 27, 2016, we expect our approved portfolio of type 2 diabetes drugs to provide the basis for our near-term revenue growth. Lyxumia had global sales of €32.7 million in 2016 and of €6.9 million for the three months ended March 31, 2017.

        In addition to these currently approved and marketed products, we also have a pipeline of other product candidates in various stages of pre-clinical and clinical development, targeting gastrointestinal, metabolic and other specialty disease areas with significant unmet medical needs. In-house inventions are the basis of our portfolio, demonstrating our ability to discover and develop innovative peptide-based product candidates with favorable therapeutic profiles.

Our Focus on Peptide-Based Medicines

        We currently focus on gastrointestinal, metabolic and other specialty diseases where we believe that the present standard of care is inadequate and where we believe that we have the resources to advance our peptide-based product candidates into the later stages of clinical development, including registration and, potentially, commercialization, while opportunistically considering partnership relationships that may arise. In addition, we are looking to focus our efforts on drug candidates that may qualify for orphan / rare disease status. Our research and development, or R&D, organization is structured to enable dynamic collaboration across various functions and project teams at each stage of discovery and development, allowing us to advance promising opportunities quickly and take advantage of our extensive knowledge of peptide design and product development.

        We have a track record of successfully inventing and developing novel peptide-based product candidates. This success is based on our deep understanding of peptide chemistry and extensive experience in improving the therapeutic characteristics of naturally-occurring peptides by modifying and optimizing their structures. The modifications we make are designed to improve upon naturally occurring peptides so

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that their therapeutic benefit, duration of action, stability and/or convenience of use favorably compare to other treatment options.

        Peptides generally have a number of advantages as drug candidates that can provide specific therapeutic benefits, including: high selectivity with effects only on the intended target; lower risks of toxicity with limited, or no, off-target effects; high potency with strong effects even at low concentrations; favorable safety profiles (including fewer side effects) with minimal drug-to-drug interactions, tailored half-lives and binding affinity; and high regulatory approval rates, with approval rates of 20%, as compared to 10% for small molecule medications. Peptides are also smaller than proteins on a molecular level, which can offer potential advantages in terms of therapeutic administration.

        Our peptide chemistry and pharmaceutical development expertise is complemented by strong downstream development competencies, including a clinical development team with experience in quality assurance and in regulatory matters. We believe that we have the requisite in-house capabilities to advance product candidates in our selected disease areas from preclinical Investigational New Drug, or IND, enabling studies to late-stage clinical development, including registration.

Our Product Pipeline

        The chart below summarizes the development stage and status of our portfolio of product candidates:


Milestones in 2017 for our product candidates

GRAPHIC

Approved Products

Adlyxin / Lyxumia and Soliqua100/33 / Suliqua

        Our portfolio of approved medicines includes lixisenatide, which we have licensed to Sanofi. Lixisenatide is our first out-licensed product approved by both the FDA and the EMA. It is marketed by Sanofi for the treatment of adults with type 2 diabetes in 45 countries outside the United States under the brand name Lyxumia, and in the United States under the brand name Adlyxin. Type 2 diabetes is a disorder that is characterized by high blood glucose, or sugar, and caused by the insufficient production of insulin and/or an inability of the body to adequately respond to insulin. Adlyxin / Lyxumia is a once-daily glucagon-like peptide-1, or GLP-1, analog that we invented. It is a synthetic form of the naturally occurring GLP-1 found in the intestines that acts as a signaling hormone, stimulating the pancreas to produce more insulin. Adlyxin / Lyxumia has been observed in clinical trials to lower levels of hemoglobin A1c, or HbA1c (a measure of the three-month average blood glucose level), with a particular effect on meal-related, or

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prandial, glucose. Lyxumia, was first approved in Europe in 2013 to improve glycemic, or glucose level, control in adult type 2 diabetes patients and has now been approved in 61 countries. Adlyxin received FDA approval on July 27, 2016 and Sanofi is currently marketing Adlyxin in the United States. Lyxumia is approved outside the United States for use in combination with oral glucose-lowering diabetes medicines or basal, or long-acting, insulin when these treatments, together with diet and exercise, do not provide adequate glycemic control. Adlyxin is approved in the United States as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus.

        Sanofi has also developed a combination of lixisenatide and Lantus which received approval from the FDA on November 21, 2016 and from the EMA on January 17, 2017. One of these combinations is currently marketed in the United States by Sanofi under the brand name Soliqua100/33 and the other has been launched in the Netherlands under the brand name Suliqua. Suliqua is expected to be launched in certain other European countries beginning in the second half of 2017. Soliqua100/33 is marketed in a single pre-filled SoloSTAR pen for once-daily dosing covering 15 to 60 units of insulin glargine 100 units/mL and 5 to 20 mcg of lixisenatide. Suliqua is marketed in two pre-filled SoloSTAR pens providing different dosing options: a 10-40 SoloSTAR pre-filled pen will deliver 10 to 40 dose steps of insulin glargine 100 units/mL in combination with 5 to 20 mcg of lixisenatide, whereas a 30-60 SoloSTAR pre-filled pen will deliver 30 to 60 units of insulin glargine 100 units/mL in combination with 10 to 20 micrograms of lixisenatide. SoloSTAR is the most frequently used disposable insulin injection pen platform in the world.

        Soliqua100/33 / Suliqua is one of the first combinations of a GLP-1 analog and basal insulin to treat type 2 diabetes to be approved for marketing and launched for sale in the United States and is one of only two products (the other being Novo Nordisk's Xultophy, which is a combination of its GLP-1 analog Victoza and basal insulin Tresiba) in this new product class. Soliqua 100/33 is approved in the United States as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus inadequately controlled on basal insulin (less than 60 units daily) or lixisenatide alone. Suliqua is authorized in Europe for use in combination with metformin to improve glycemic control when this has not been provided by metformin alone or metformin combined with another oral glucose lowering medicinal product or with basal insulin.

        Soliqua100/33 / Suliqua has been observed in clinical trials to result in benefits, as compared to treatments with either basal insulin or a GLP-1 analog alone, pointing towards what we believe to be a potentially significant commercial opportunity.

        We are obligated to pay Alkermes plc, or Alkermes, 13% of all future milestone payments relating to Adlyxin / Lyxumia and Soliqua100/33 / Suliqua. Alkermes is the successor in interest to a termination agreement among each of us, Elan, and certain of Elan's subsidiaries that were all party to a now-terminated joint venture agreement relating to lixisenatide. In addition, we agreed to pay one of our employees who was involved in inventing lixisenatide a royalty of 0.5% on all such milestone and royalty payments. With respect to the remaining 86.5% of royalty revenue on Adlyxin/Lyxumia, we have instructed the licensee to pay this revenue directly into a collection account for the purpose of paying interest and principal on a $50 million royalty bond, which we refer to as the ZP SPV Notes, that we issued through a wholly owned subsidiary in December 2014. See "Business—Material Contracts—ZP SPV Notes (Royalty Bond)." No royalty payments on revenue that we expect to receive from Soliqua100/33 / Suliqua will be required to repay the ZP SPV Notes. The ZP SPV Notes initially required us to maintain a collateral reserve account securing our payment obligations thereunder, and that such collateral reserve account be funded by certain milestone payments related to both Adlyxin / Lyxumia and Soliqua100/33 / Suliqua. As of December 31, 2016, we had paid DKK 45.8 million ($6.5 million), or 86.5% from royalties received in 2015 and 2016 in respect of Lyxumia into a collection account to service the payments of principal and interest on the ZP SPV Notes. On March 15, 2017 we amended the ZP SPV Notes to provide for the redemption of $25 million of the ZP SPV Notes at premium of 103% of the notes being redeemed. The amendment to the ZP SPV Notes provides that, following such redemption, the remaining $25 million will be payable in

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full on March 15, 2021, subject to early redemption rights and conditions that ZP SPV holds as the issuer of the notes. Following our amendment of the ZP SPV Notes and the concurrent redemption, the remaining $26.2 million held as collateral for the ZP SPV Notes in the collateral reserve account was released to us. Additionally, on March 15, 2017, we issued a guarantee in favor of the trustee and the holders of the ZP SPV Notes, guaranteeing the payment and performance by the issuer of the ZP SPV Notes of the secured obligations (as such term is defined in the indenture governing the ZP SPV Notes) thereunder.

Product Candidates

Out-Licensed Product Candidates

        In addition to our approved products that we have out licensed to Sanofi, we have out licensed certain of our product candidates to Boehringer Ingelheim International GmbH, or BI. We have out licensed two peptide programs to BI that have been advanced into preclinical development: a once-weekly novel dual glucagon/GLP-1 receptor agonist product candidate for the treatment of diabetes and/or obesity and amylin, a novel long-acting analog for the treatment of obesity and diabetes. The lead product candidates for each collaboration were selected in February 2016 and October 2015, respectively. In the second half of 2016, BI confirmed its intention to bring both product candidates into Phase 1 clinical testing in 2017.

        Through March 31, 2017, we received an aggregate of DKK 1.5 billion ($215.5 million) in license, cost reimbursement, milestone and royalty payments from our partners over the life of our collaborations. We intend to invest substantially all of the future milestone and royalty payments that we expect to receive from our current collaborations, other than those paid to third parties, used to service our ZP SPV Notes or for general corporate purposes, into further growing and advancing our internal pipeline of novel investigational product candidates.

Our Internal Product Candidates

        Our internal pipeline includes three product candidates in clinical development: glepaglutide*, which is being developed to treat short bowel syndrome, or SBS; dasiglucagon, formulated for use in a single-dose, ready-to-use disposable injection pen, which is being developed as a rescue treatment for severe hypoglycemia or "insulin shock"; and dasiglucagon, formulated for use in multiple-dose administrations, which is being developed for use in new treatment concepts for insulin-dependent diabetes patients, such as a dual-hormone artificial pancreas system for improved hypoglycemia control and better diabetes management, and for use with a single-hormone pump for the treatment of congenital hyperinsulinism, or CHI.


*
Glepaglutide / dasiglucagon are proposed International Non-proprietary Names (pINN)

    Glepaglutide

        In September 2015, we advanced glepaglutide, a novel long-acting GLP-2 analog, into Phase 2 clinical development. Like GLP-1, GLP-2 is a signaling hormone secreted upon nutrient intake that stimulates intestinal growth. In pre-clinical trials, glepaglutide has shown a long half-life and differentiated stability in a liquid formulation, as compared to native GLP-2, which we believe can be used in the development of a product candidate that better meets patient needs, including by providing an easy-to-use option for the treatment of SBS. Current treatment options for SBS are limited to: eating small, but highly frequent, meals to put less stress on the shortened bowel; parenteral, or intravenous, support nutrition through a central catheter for up to 16 hours per day; and teduglutide (marketed by Shire plc as Gattex), a GLP-2 analog available only as a lyophilized powder, requiring a multi-step reconstitution process before injection, which can make it difficult for patients to administer.

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        In February 2016, we began dosing glepaglutide to patients with SBS in a Phase 2 proof-of-concept clinical trial. The last subject was dosed in January 2017. In June 2017, top-line results of this Phase 2 trial were released. In the Phase 2 trial, glepaglutide met the primary endpoint of reducing fecal wet weight output in patients with SBS. For the mid-dose and high-dose formulations of glepaglutide tested, the reductions in fecal wet weight output were 23% and 30%, respectively. Increases in fluid and energy absorption were also observed.

        We plan to submit an IND to the FDA in the third quarter of 2017 in connection with a proposed pharmacokinetic trial, or a trial that studies characteristic interactions of a drug and the body, to evaluate the potential for reducing the glepaglutide dosing from once daily to once weekly.

        We are obligated to pay 0.5% of all future milestone and royalty payments relating to glepaglutide to one of our employees who was involved in inventing glepaglutide.

    Dasiglucagon

        We are also developing dasiglucagon, a novel analog of human glucagon, a hormone that increases the level of blood glucose in the body. In pre-clinical trials, dasiglucagon has shown a favorable stability and solubility profile in a liquid formulation, as compared to native glucagon, and is being investigated for use as a rescue treatment for severe hypoglycemia, in a dual-hormone artificial pancreas system for insulin-dependent diabetes patients, and in a single-hormone pump for subcutaneous infusion as a treatment for CHI. We are currently exploring two different formulations for these opportunities in parallel:

    A single-dose rescue treatment for acute, severe hypoglycemia or "insulin shock" to be made available in a single-dose, ready-to-use disposable injection pen, which would provide diabetes patients, relatives and caregivers with a treatment option that is more convenient and faster to use than existing treatment alternatives. In August 2016, top line results were reported from our Phase 2 clinical trial of this formulation. Further results from the Phase 2 trial were presented during a poster session at the 77th Congress of the American Diabetes Association in June 2017 and the full results are expected to be published in 2017. In the Phase 2 trial, it was observed that all subjects treated with one of the three highest doses of dasiglucagon or with the approved glucagon product achieved a blood glucose concentration of >70 milligrams per deciliter, or mg/dL, within 30 minutes of dosing. In the same dose groups, time to plasma glucose increases of >20mg/dL was observed to be similar for dasiglucagon and an approved glucagon, with a median time of 9-10 minutes. Patient enrollment for a Phase 3 clinical trial evaluating the immunogenicity of repeated single doses of dasiglucagon was initiated in late June 2017 and initiation of an additional Phase 3 clinical trial is planned before the end of 2017. We believe the market potential for this treatment to be attractive as, at present, glucagon is only available as a lyophilized powder in a vial requiring reconstitution before injection, making it difficult for patients and caretakers to administer.

    A multiple-dose version intended for use in a dual-hormone artificial pancreas system for insulin-dependent diabetes patients and use in a single-hormone pump for subcutaneous infusion for the treatment of CHI.

      Third party clinical studies have demonstrated that adding a glucagon component to an artificial pancreas system (insulin pump) significantly limits the risk of hypoglycemia, while ensuring better glucose management for patients with type 1 diabetes. We initiated a collaboration with Beta Bionics, Inc., or Beta Bionics, a medical device company, to investigate the use of our multiple-dose version of dasiglucagon with Beta Bionics' iLet investigational bionic pancreas platform technology in June 2016, and formalized our collaboration with Beta Bionics in a February 2017 co-development agreement. iLet is a dual-hormone pocket-sized wearable medical device that Beta Bionics believes will be able to autonomously manage blood sugar levels in diabetes patients. We have submitted an IND for this use of dasiglucagon to the FDA. We retain all proprietary rights to

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      dasiglucagon under this collaboration arrangement. In December 2016, we initiated a Phase 2a clinical trial in adult patients with type 1 diabetes to test the safety, tolerability and efficacy in improving glycemic control of dasiglucagon as compared to a recombinant glucagon marketed by Eli Lilly, when administered by a test-version of the iLet bionic pancreas in which an iPhone is used to control dosing using an algorithm developed by Beta Bionics for use in the iLet bionic pancreas. The test conditions were chosen to optimize the opportunity to evaluate the ability of dasiglucagon (and comparator) to maintain blood glucose in the desired target glycemic range. Results from this single-center, open-label randomized cross-over trial were reported in June 2017. The trial provided evidence that dasiglucagon was able to maintain blood glucose in the target glycemic range in a manner comparable to human recombinant glucagon when administered automatically via the iLet controlled pump system. We also initiated, in December 2016, a Phase 2a clinical trial in adult type 1 diabetes patients treated with continuous subcutaneous insulin infusion, or insulin pumps, to assess pharmaconkinetic responses after micro-doses of dasiglucagon under euglycemic and hypoglycemic conditions and compared to a recombinant glucagon marketed by Eli Lilly. Results from this trial, in which dasiglucagon was observed to be safe and well tolerated across all tested dose levels and to provide clinically relevant increases in blood glucose under both euglycemic and hypoglycemic settings, were released in May 2017.

      In June 2017, we obtained orphan medicinal product designation from the European Commission for the use of our multiple-dose formulation of dasiglucagon for the treatment of CHI. In June 2017, we also submitted rare pediatric disease and orphan drug designation applications to the FDA for the treatment of CHI. We expect a decision to be made on these applications in the second half of 2017. Newborns with CHI have persistent episodes of hypoglycemia and are at risk of developing brain damage and many will have to undergo major pancreatic surgery to prevent the hypoglycemic episodes. Third party studies have demonstrated the potential of preventing persistent hypoglycemia in CHI by treatment with lyophilized glucagon reconstituted daily. Dasiglucagon could offer an attractive alternative to the current standard of care with its potential to be infused subcutaneously via a pump. We believe that the clinical trials conducted for our dual-hormone artificial pancreas program provide support for initiating clinical trials in newborns with CHI.

Our Intellectual Property

        Our intellectual property, or IP, portfolio primarily includes patents and patent applications, trademarks and trade secrets. As our business and technology has matured, our internal organization, with the support of experienced external professionals, has sought to manage our IP in line with our overall strategy, and has built a significant patent portfolio directed at the various products we have invented and technologies we employ. Since our incorporation, we have filed patent applications in numerous patent families to cover proprietary technologies, potential products of interest and related methods, such as methods of use. We describe in more detail below the patent families covering our key product candidates.

        We own two patent families covering lixisenatide, including 66 non-US patents in 34 non-US jurisdictions all licensed exclusively to Sanofi. We own two patent families covering two related proprietary GLP-2 analogs, glepaglutide and elsiglutide or backup candidates. These two patent families include 64 non-US patents in 43 non-US jurisdictions and 19 pending patent applications in 10 jurisdictions. Although the disclosures of one of these two patent families encompass both elsiglutide and glepaglutide, it has been possible to claim the subject matter relating to elsiglutide and glepaglutide in separate patents in the United States. For our internal compound dasiglucagon, a glucagon analog that has a favorable stability profile, we own one patent family including 15 pending non-US patent applications in 8 non-US jurisdictions.

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Our Leadership

        Our senior management team and international board of directors possess significant global and diversified expertise in medicinal discovery, pharmaceutical development, clinical design and product advancement, as well as market access and commercialization. Members of our management team have experience advancing medicinal products from discovery stage through to market and have an average of 14 years of experience in the life sciences industry.

Our Competitive Strengths

    Expected near-term royalty and milestone payments from our out-licensed portfolio of treatments and peptide-based product candidates.

    The opportunity to advance and broaden our internal pipeline of novel investigational treatments funded by our expected future milestone and royalty payments.

    Expertise in the invention and development of peptide-based product candidates, coupled with a track record of pharmaceutical development and clinical achievement, for peptide-based medicines.

    An experienced management team and board of directors with global and broad-based scientific, medical and commercial expertise, as well as an agile and efficient organizational structure.

Our Growth Strategies

    Focus on orphan and specialty diseases, including gastrointestinal and metabolic therapeutic areas, which offer the opportunity to progress through clinical development and registration.

    Maintain our expertise in advancing products through clinical development and registration while developing our internal commercialization skills.

    Accelerate growth through strategic collaborations, in-licensing opportunities and acquisition opportunities in specialty and orphan/rare disease areas where we can apply our in-house peptide expertise and development capabilities.

Risks Associated with Our Business

        Our ability to implement our business strategy is subject to numerous risks and uncertainties. As a biotechnology company, we face many risks inherent in our business and our industry generally. You should carefully consider all of the information set forth in this prospectus and, in particular, the information in the section entitled "Risk Factors," prior to making an investment in our ADSs. These risks include, among others, the following:

    We incurred net losses in recent periods and may continue to do so. In the fiscal year ended December 31, 2016, our net losses were DKK 153.9 million ($22.1 million). In the three months ended March 31, 2017, our net losses were DKK 26.3 million ($3.8 million).

    The regulatory approval processes of the FDA, the EMA and other comparable regulatory authorities are lengthy, time consuming and inherently unpredictable, and if we or our collaboration partners are ultimately unable to obtain regulatory approval for our internal or out-licensed product candidates, our business could be substantially harmed.

    For certain product candidates and clinical development programs, we depend on collaboration partners to develop and conduct clinical trials with, obtain regulatory approvals for, and market and sell our product candidates. We are heavily dependent on our collaboration with Sanofi.

    In order to complete the clinical trials described in this prospectus, we may need to raise additional funding, which may not be available on acceptable terms, or at all, and failure to obtain this capital

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      when needed may force us to delay, limit or terminate our product development efforts or other operations.

    We may not be successful in executing our business strategy to use cash flows from our approved out-licensed products and product candidates to expand our novel, internal target discovery platform to build a pipeline of product candidates for a multiplicity of reasons.

    We are dependent on the successful commercialization of Adlyxin and Soliqua100/33 in the United States, Lyxumia outside the United States and Suliqua in the EU and the clinical success of our internal product candidates, including glepaglutide and dasiglucagon.

    Our product candidates will need to undergo clinical trials that are time consuming and expensive, the outcomes of which are unpredictable, and for which there is a high risk of failure. If clinical trials of our product candidates fail to satisfactorily demonstrate safety and efficacy to the FDA, the EMA and any other comparable regulatory authority, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development of these product candidates.

    We face substantial competition from companies with considerably more resources and experience than we have, which may result in others discovering, developing, receiving approval for or commercializing products before or more successfully than us.

    Our ability to compete may decline if we or our collaboration partners are unable to or do not adequately protect IP rights on our product candidates or future product candidates.

    Material weaknesses have been identified in our internal control over financial reporting, and if we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results in a timely manner or prevent fraud.

Corporate Information

        We were incorporated on April 1, 1997 as a private limited liability company (Anpartsselskab, or ApS) under Danish law and originally under the name ApS KBUS 8 NR. 4581. We are registered with the Danish Business Authority (Erhvervsstyrelsen) in Copenhagen, Denmark under registration number (CVR) no. 20045078. We changed our name to Peptide Probe Technologies ApS on August 22, 1997 and to Zealand Pharmaceuticals ApS on December 2, 1998. On December 22, 1998, we converted to a public limited liability company (Aktieselskab, or A/S) and changed our name to Zealand Pharmaceuticals A/S. On May 7, 2002, we changed our name to Zealand Pharma A/S. We were publicly listed on Nasdaq Copenhagen in November 2010.

        Our headquarters and registered office, where all our activities, including R&D, are currently conducted, is located at Smedeland 36, 2600 Glostrup, Denmark, and our telephone number is +45 88 77 36 00. Our website address is www.zealandpharma.com. The information on, or that can be accessed through, our website is not part of and should not be incorporated by reference into this prospectus. We have included our website address as an inactive textual reference only.

Implications of Being an "Emerging Growth Company" and a Foreign Private Issuer

        As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS

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Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

    a requirement to include only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure; and

    an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act.

        We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company as of the end of any fiscal year following the fifth anniversary of our initial public offering or if, prior to that date, we have more than $1.07 billion in annual revenue or more than $700 million in market value of the equity securities held by non-affiliates as of the end of our second fiscal quarter, or on the date that we have issued more than $1 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens, and therefore the information that we provide holders of shares and ADSs may be different than the information you might receive from other public companies in which you hold equity. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards applicable to public companies. We currently prepare our consolidated financial statements in accordance with IFRS, as issued by the IASB, which does not have separate provisions for publicly traded and private companies. However, in the event that we convert to accounting principles generally accepted in the United States (which we do not currently intend to do) while we remain an emerging growth company, we have irrevocably elected to opt out of such extended transition period.

        Upon consummation of this offering, we will report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we continue to qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

    the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

    the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

    the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events.

        Both foreign private issuers and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Even if we no longer qualify as an emerging growth company, so long as we remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of companies that are neither an emerging growth company nor a foreign private issuer.

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The Offering

American Depositary Shares (ADSs) offered by us

          ADSs, representing        shares

ADSs to be outstanding immediately after this offering

 

        ADSs, representing        shares

Shares to be outstanding immediately after this offering

 

        shares

Option to purchase additional ADSs

 

In addition, we have granted the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to        additional ADSs representing        shares to cover over-allotments.

ADSs

 

Each ADS represents one (1) ordinary share. As an ADS holder, you will not be treated as one of our shareholders, you will not have shareholder rights and you may not be able to exercise your right to vote the shares underlying your ADSs. You will have the contractual rights of an ADS holder, as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time. ADS holders may only exercise voting rights with respect to the shares underlying the ADSs in accordance with the provisions of the deposit agreement, which will provide that a holder may vote the shares underlying any ADSs for any particular matter to be voted on by our shareholders either by withdrawing the shares underlying the ADSs or, to the extent permitted by applicable law and as permitted by the depositary, by requesting a temporary registration as shareholder and authorizing the depositary to act as proxy. The depositary will try, as far as practical, to vote the shares underlying the ADSs as instructed by the ADS holders. However, each registered holder of our ordinary shares, including the depositary, is only permitted to vote its shares in an entirety for or against any particular shareholder vote, under the Company's charter. Our board of directors is committed to using reasonable efforts to work towards removing this restriction at the extraordinary general meeting to be convened to approve this offering on July 31, 2017. If this restriction is removed, the depositary will be able to vote the shares registered in its name underlying the ADSs to more closely reflect the preferences of the ADS holders, thereby effectively permitting pass-through voting by ADS holders who indicate their voting preference to the depositary in accordance with, and subject to, the depositary's procedures. To better understand the terms of the ADSs, see the sections of this prospectus entitled "Description of American Depositary Shares" and "Risk Factors—Risks Related to this Offering." We encourage you to read the deposit agreement, which will be filed as an exhibit to the registration statement of which this prospectus forms a part.

Depositary

 

The Bank of New York Mellon

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Use of proceeds

 

We estimate that the net proceeds from this offering will be approximately $        million, or approximately $        million if the underwriters exercise their option to purchase additional ADSs in full, after deducting the underwriting commission and estimated offering expenses payable by us, based on an assumed initial public offering price of $        per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen on        , 2017 of DKK        , at the U.S. dollar/DKK exchange rate of        as of        , 2017. We intend to use the net proceeds from this offering, together with our existing cash resources and future revenue from our out-licensed portfolio through 2020, for the following purposes: (i) to fund clinical trials and registration of glepaglutide as a treatment for SBS; (ii) to fund clinical trials and registration of dasiglucagon as single-dose rescue treatment for acute, severe hypoglycemia or "insulin shock"; (iii) to fund our clinical trials of dasiglucagon as a multiple-dose version for use in a dual-hormone artificial pancreas system for improved hypoglycemia control and better diabetes management; (iv) to fund clinical trials of dasiglucagon as a multiple-dose version for use in a single-hormone pump for the treatment of congenital hyperinsulinism; (v) to start building commercial and supply chain competencies; and (v) to advance in-house, as well as in-licensed, research projects into preclinical and clinical development, to fund working capital and for general corporate purposes, which may include funding for new research and development activities, the hiring of additional personnel, capital expenditures and the costs of operating as a public company.

 

See "Use of Proceeds" for a more complete description of the intended use of proceeds from this offering.

Dividend policy

 

We have never paid or declared any cash dividends on our shares, and we do not anticipate paying any cash dividends on our shares in the foreseeable future. See "Dividend Policy."

Risk factors

 

See "Risk Factors" and other information included in this prospectus for a discussion of factors that you should consider carefully before deciding to invest in the ADSs.

Listing

 

We have applied to have the ADSs listed on The NASDAQ Global Select Market, or NASDAQ, under the symbol "ZLND."

        The number of shares to be outstanding after this offering is based on 26,187,402 shares outstanding as of June 30, 2017 and excludes up to 2,115,668 shares that may be issued upon the exercise of outstanding warrants at a weighted average exercise price of DKK 118.3 per share. In addition, our board of directors is authorized to grant up to 2,750,000 warrants under the 2015 employee incentive program through April 21, 2020, of which 1,293,674 had not yet been granted as of June 30, 2017. Unless otherwise indicated, the number of shares described assumes no exercise of the underwriters' option to purchase up to        additional ADSs and does not account for shares available for issuance under outstanding equity incentive programs.

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Summary Consolidated Financial Data

        The following tables present summary consolidated financial data for our business. We derived the summary consolidated income statement data for the years ended December 31, 2016 and 2015 from our audited consolidated financial statements, which have been restated as discussed in Note 1 of such consolidated financial statements, included elsewhere in this prospectus. We derived the summary consolidated income statement data for the three months ended March 31, 2017 and 2016 and the summary consolidated statement of financial position data as of March 31, 2017 from our unaudited condensed consolidated interim financial statements, which have been restated as discussed in Note 1 of such unaudited condensed consolidated interim financial statements, included elsewhere in this prospectus. The pro forma data included in the summary consolidated statement of financial position data is unaudited. We maintain our books and records in DKK and prepare our audited consolidated financial statements in accordance with IFRS as issued by the IASB. You should read this data together with our consolidated financial statements and related notes appearing elsewhere in this prospectus and the information under the captions "Capitalization," "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our historical results are not necessarily indicative of our future results.


Consolidated Income Statement Data

 
  Year Ended December 31,   Three Months ended
March 31,
 
(in millions, except per share data)
  2016   2016   2015(1)   2017   2017   2016(1)  
 
  $(2)   DKK   DKK   $(2)   DKK   DKK  

Revenue

    33.7     234.8     187.7     11.1     77.6     6.7  

Royalty expenses

    (4.5 )   (31.5 )   (22.3 )   (1.5 )   (10.5 )   (0.9 )

Research and development expenses

    (38.5 )   (268.2 )   (217.7 )   (8.7 )   (60.7 )   (63.7 )

Administrative expenses

    (7.5 )   (52.5 )   (41.8 )   (1.4 )   (9.9 )   (7.5 )

Other operating income

    0.2     1.7     12.8         0.1     0.9  

Operating loss

    (16.6 )   (115.7 )   (81.3 )   (0.5 )   (3.3 )   (64.5 )

Financial income

    0.1     0.6     3.9     0.1     0.8     0.8  

Financial expenses

    (6.4 )   (44.4 )   (42.4 )   (3.6 )   (25.2 )   (15.2 )

Loss before tax

    (22.9 )   (159.4 )   (119.8 )   (4.0 )   (27.7 )   (78.9 )

Income tax benefit

    0.8     5.5     5.9     0.2     1.4     1.1  

Net loss for the period

    (22.1 )   (153.9 )   (114.0 )   (3.8 )   (26.3 )   (77.8 )

Loss per share

                                     

Basic loss per share

    (0.9 )   (6.33 )   (4.94 )   (0.15 )   (1.03 )   (3.27 )

Diluted loss per share

    (0.9 )   (6.33 )   (4.94 )   (0.15 )   (1.03 )   (3.27 )

(1)
Our financial statements for the year ended December 31, 2015 and for the three months ended March 31, 2016 have been restated for the correction of certain misstatements. See Note 1 to our consolidated financial statements and Note 1 to our unaudited condensed consolidated interim financial statements.

(2)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

        The following table presents summary unaudited consolidated statement of financial position data as of March 31, 2017 on an actual basis; and on a pro forma basis to give effect to the issuance of                ADSs, representing            shares, in this offering at an assumed initial public offering price of $            per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen on                        , 2017 of DKK            , at the U.S. dollar/DKK exchange rate of            as of                        , 2017 and an ADS-to-share ratio of            , after deducting the underwriting commission and estimated

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offering expenses payable by us (excluding the potential exercise by the underwriter of their over-allotment option).


Consolidated Statement of Financial Position Data:

 
  As of March 31, 2017  
(in millions)
  Actual   Pro forma  
 
  $(1)   DKK   $   DKK  

Cash and cash equivalents

    59.0     410.3              

Restricted cash

    1.0     6.7              

Total assets

    68.1     474.2              

Share premium

    207.2     1,442.1              

Retained (losses)

    (174.6 )   (1,215.5 )            

Total equity

    36.3     252.7              

Non-current liabilities

    18.2     126.5              

Current liabilities

    13.6     95.0              

Total equity and liabilities

    68.1     474.2              

(1)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

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RISK FACTORS

        Investing in the ADSs involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our consolidated financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations," before deciding whether to invest in the ADSs. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of the ADSs could decline, and you may lose all or part of your investment.

Risks Related to Our Business

We have incurred net losses in recent periods and may continue to do so.

        We recognized net losses of DKK 153.9 million ($22.1 million) in 2016 and DKK 114.0 million in 2015. In the three months ended March 31, 2017, we recognized a net loss of DKK 26.3 million. These losses are primarily the result of our internal and external research expenditures and development costs for conducting preclinical studies and clinical trials in respect of our internal product portfolio. Our ability to generate revenue from our internal product portfolio depends on our ability to successfully develop and commercialize our product candidates and to obtain the regulatory and marketing approvals necessary to commercialize one or more of our product candidates.

        In 2015, 2016 and the three months ended March 31, 2017, we generated revenue from milestone payments for our out-licensed products and royalty payments in respect of global net sales of lixisenatide, which is out-licensed to and marketed by Sanofi S.A., or Sanofi, both as a stand-alone therapy under the brand names Adlyxin in the United States and Lyxumia in the EU and in various other jurisdictions and as a combination therapy with Lantus under the brand names Soliqua100/33 in the United States and Suliqua in the EU. Our ability to generate revenue from out-licensing certain of our product candidates depends on the ability of our collaboration partners to successfully commercialize, complete the development of and obtain the regulatory and marketing approvals for our out-licensed product candidates.

        Our ability and our collaboration partners' ability to generate future revenue from product sales or pursuant to milestone payments depend heavily on many factors, including, but not limited to:

    completing research activities and preclinical and clinical development of our out-licensed and internal product candidates;

    continuing sales of Adlyxin / Lyxumia and Soliqua100/33 / Suliqua;

    on our own, or together with our strategic collaboration partners, obtaining regulatory approvals for our product candidates;

    negotiating favorable terms of and entering into further collaboration, licensing or other arrangements;

    the ability of our collaboration partners to successfully commercialize or our ability to commercialize or co-promote our product candidates;

    obtaining market acceptance of our product candidates, if approved;

    addressing any competing technological or market developments;

    identifying, assessing, acquiring, in-licensing or developing new product candidates;

    maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how, and our ability to develop, manufacture and commercialize our product candidates and products without infringing the intellectual property rights of others; and

    attracting, hiring, and retaining qualified personnel.

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        In cases where we, or our collaboration partners, are successful in obtaining regulatory approvals to market one or more of our product candidates, our revenue will be dependent, in part, upon the size of the markets in the territories for which regulatory approval is granted, the price or prices at which we are able to sell such products and our ability to get paid or reimbursed for our products at such prices. If the number of individuals suitable for our product candidates is not as significant as we estimate, the indications approved by regulatory authorities are narrower than we expect, or the reasonably accepted population for treatment is narrowed by competition, physician choice or applicable guidelines, we may not generate significant revenue from the sale of such products, even if approved. Our failure to generate revenue from sales of one or more of our product candidates or pursuant to license or milestone payments could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

        We expect our expenses to continue to increase and that we will to continue to incur losses as we further develop our internal product portfolio. In particular, we anticipate that our expenses and losses will increase substantially if and as we:

    continue the preclinical and clinical development of our internal product candidates;

    expand the scope of or otherwise materially modify our current clinical trials for our internal product candidates;

    begin new clinical trials for our internal product candidates;

    develop our commercial manufacturing capabilities for our internal product candidates;

    seek regulatory and marketing approvals for any internal product candidates that successfully complete clinical trials;

    establish a sales, marketing and distribution infrastructure to commercialize any drugs for which we may obtain marketing approval and for which we have not entered into a collaboration with a third party;

    seek to identify and validate additional product candidates;

    acquire or in-license product candidates and technologies;

    maintain, protect and expand our intellectual property portfolio;

    attract new and retain existing skilled personnel; and

    create additional infrastructure to support our operations as a U.S. public company.

        The net losses we incur may fluctuate significantly from year to year, such that a year-to-year comparison of our results of operations may not be a good indication of our future performance. In any particular period or periods, our operating results could be below the expectations of securities analysts or investors, which could cause the price of the ADSs to decline.

We are heavily dependent on our collaboration with Sanofi.

        We have entered into a number of agreements for the out-licensing of certain products and product candidates and rely on our collaboration partners to develop and commercialize those product candidates. In particular, we entered into our global license agreement with Sanofi-Aventis Deutschland GmbH, a wholly-owned subsidiary of Sanofi, or the Sanofi License Agreement, which grants Sanofi the exclusive worldwide rights to develop, manufacture, commercialize and market lixisenatide, both as a stand-alone and combination therapy. To date, the majority of our revenue has been derived from milestone payments made by Sanofi, as well royalty payments from Sanofi in respect of sales of our approved product Adlyxin in the United States and Lyxumia outside the United States. Following the FDA and EMA approvals of Soliqua100/33 and Suliqua, in the United States and the EU, respectively, and the subsequent commercialization thereof, we will continue to be highly dependent on the Sanofi License Agreement for

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revenue in the foreseeable future. In December 2016, Sanofi announced its plan to cut its diabetes and cardiovascular salesforce by 20% in the United States as a result of increased pricing pressure and competition within this sector. This decision, or if Sanofi were to further change its priorities, either in the United States or around the world, reallocate resources relating to Lyxumia / Adlyxin and Soliqua100/33 / Suliqua, terminate its relationship with us, fail to make payments as and when due under the Sanofi License Agreement or fail to devote sufficient time and resources or slow down or change schedules or strategies for the development, commercialization and marketing of Lyxumia / Adlyxin and Soliqua100/33 / Suliqua, could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

The regulatory approval processes of the FDA, the EMA and other comparable regulatory authorities are lengthy, time consuming and inherently unpredictable, and if we or our collaboration partners are ultimately unable to obtain regulatory approval for our internal or out-licensed product candidates, our business could be substantially harmed.

        The time required to obtain approval by the FDA, the EMA and other comparable regulatory authorities is unpredictable, but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate's clinical development and varies among jurisdictions. While products that we have out licensed to Sanofi have received regulatory approval, we have not obtained regulatory approval in the United States for any product candidate for which we retain full development, commercialization and marketing control, and it is possible that none of our existing product candidates or any product candidates that we may seek to develop in the future will ever obtain regulatory approval.

        Our product candidates could fail to receive regulatory approval for many reasons, including, but not limited to, the following:

    the FDA, the EMA or other comparable regulatory authorities may disagree with the design or implementation of our clinical trials;

    we or our collaboration partners may be unable to demonstrate to the satisfaction of the FDA, the EMA or other comparable regulatory authorities that a product candidate is safe and effective for its proposed indications;

    we or our collaboration partners may be unable to demonstrate that a product candidate's clinical and other benefits outweigh its safety risks;

    the FDA, the EMA or other comparable regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

    the data collected from clinical trials of our product candidates may not be sufficient to support the submission of a new drug application, or NDA, supplemental NDA or other submission or to obtain regulatory approval in the United States, Europe or elsewhere;

    the FDA, the EMA or any other comparable regulatory authority may fail to approve the labeled conditions for use that we or our collaboration partners propose for a product candidate;

    the FDA, the EMA or other comparable regulatory authorities may fail to approve the manufacturing processes or facilities of any third party manufacturers with which we may contract for clinical and commercial supplies or such processes or facilities may not pass a preapproval inspection; and

    the approval policies or regulations of the FDA, the EMA or other comparable regulatory authorities may change or differ significantly from one another in a manner rendering our clinical data insufficient for approval.

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        This lengthy approval process, as well as the unpredictability of ongoing clinical trial results, may result in our or our collaboration partners' failure to obtain regulatory approval to market our product candidates, which would harm our business, financial position, results of operations and future growth prospects significantly. In addition, even if we or our collaboration partners were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than requested, may grant approval contingent on the performance of costly post-marketing clinical trials or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. In certain jurisdictions, regulatory authorities may not approve the price we or our collaboration partners intend to charge for our products. Any of the foregoing scenarios could materially harm the commercial prospects of our product candidates.

For certain marketed products, product candidates and clinical development programs, we depend on collaboration partners to develop and conduct clinical trials with, obtain regulatory approvals for, and market and sell our product candidates. If such collaboration partners fail to perform as expected, the potential for us to generate future revenue from such product candidates would be significantly reduced and our business would be significantly harmed.

        For certain marketed products, product candidates and clinical development programs, we do, and may in the future continue to, rely on our collaboration partners to develop, conduct clinical trials of, and commercialize our product candidates and approved products. We have existing collaborations with Sanofi and Boehringer Ingelheim GmbH, or BI, and, collectively with Sanofi, our Licensees. We may also enter into collaboration agreements with other parties in the future relating to product candidates. Ultimately, if such out-licensed product candidates are advanced through clinical trials and receive marketing approval from the EMA (as was the case for Lyxumia and Suliqua), the FDA (as was the case for Adlyxin and Soliqua100/33) or similar regulatory authorities, certain of our collaboration partners will be responsible for commercialization of these out-licensed products. The potential for us to obtain future development milestone payments and, ultimately, generate revenue from royalties on sales of such out-licensed products depends on the successful development, regulatory approval, marketing and commercialization by our collaboration partners. If our collaboration partners do not perform in the manner we expect or fail to fulfill their responsibilities in a timely manner or at all, if our agreements with them terminate or if the quality or accuracy of the clinical data they obtain is compromised, the clinical development, regulatory approval and commercialization efforts related to our out-licensed product candidates could be delayed or terminated, and it could become necessary for us to assume the responsibility at our own expense for the clinical development of such product candidates. In that event, we would likely be required to limit the size and scope of efforts for the development and commercialization of such product candidate; we would likely be required to seek additional financing to fund further development or identify alternative strategic collaboration partners; our potential to generate future revenue from royalties and milestone payments from such product candidates would be significantly reduced or delayed; and it could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

        Collaborations involving our out-licensed product candidates pose a number of risks, including the following:

    collaboration partners have significant discretion in determining the efforts and resources that they will apply to these partnerships;

    collaboration partners may not perform their obligations as expected;

    collaboration partners may not pursue development and commercialization of our out-licensed product candidates or may elect not to continue or renew development or commercialization programs, based on clinical trial results, changes in the collaboration partners' strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities;

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    collaboration partners may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

    collaboration partners may have or could independently develop, or develop with third parties, products that compete directly or indirectly with our out-licensed product candidates;

    disagreements with collaboration partners, including disagreements over proprietary rights, contract interpretation or the conduct of product research, development or commercialization programs, may cause delays or lead to termination of such programs, or require us to assume unplanned expenditures, responsibilities or liabilities with respect to product candidates we have out licensed, or may result in costly and time consuming litigation or arbitration;

    collaboration partners may infringe the intellectual property rights of third parties, which may result in costly and time consuming litigation or arbitration in which we may be involved, as a party or in support of our collaboration partners;

    collaboration partners with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;

    collaboration partners with marketing and distribution rights may incur costs that have the effect of reducing the base on which royalties are calculated;

    collaboration partners may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and

    collaboration agreements may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.

        In addition, certain collaboration agreements provide our collaboration partners with rights to terminate such agreements and licenses granted under such agreements under various conditions, which, if exercised, would adversely affect our product development efforts, could make it difficult for us to attract new collaboration partners and may adversely affect our reputation. Our collaboration partners may have the right to terminate their respective collaboration agreements with us. For example, under the Sanofi License Agreement, pursuant to which Sanofi is responsible for all commercialization activities in respect of the licensed products thereunder and is required to pay royalties and milestone payments upon the occurrence of certain events, Sanofi has the right to terminate the Sanofi License Agreement in its sole discretion at any time upon 90 days' prior written notice. Any such termination of the Sanofi License Agreement or other agreements with our collaboration partners could have a material adverse effect on our business, financial position and results of operations.

        The timing and amount of any milestone and royalty payments we may receive under our agreements with our collaboration partners will depend on, among other things, the efforts, allocation of resources, and successful development and commercialization of our product candidates. We cannot be certain that any of the development and regulatory milestones will be achieved or that we will receive any future milestone payments under these agreements. In addition, in certain circumstances we may believe that we have achieved a particular milestone and the applicable collaboration partner may disagree with our belief. In that case, receipt of that milestone payment may be delayed or may never be received, which may require us to adjust our operating plans.

We issued a bond in December 2014, which reduces our ability to use royalty payments received under the Sanofi License Agreement for other purposes.

        On December 12, 2014, we raised $50 million through the issuance of a non-dilutive, limited-recourse royalty bond, or the ZP SPV Notes, which is secured by 86.5% of the annual royalty payments received under the Sanofi License Agreement for lixisenatide. The ZP SPV Notes bear interest at a fixed rate of 9.375% per annum. Pursuant to the terms of the ZP SPV Notes, repayment of amounts due will come from

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royalty payments received in respect of Adlyxin / Lyxumia with no recourse to future royalty revenue on other out-licensed product candidates, including Soliqua100/33 / Suliqua. The ZP SPV Notes include customary events of default, including failure to pay principal and interest on the ZP SPV Notes, a failure of our wholly owned subsidiary, ZP SPV 1 K/S, or ZP SPV, or our wholly owned subsidiary, ZP Holding SPV K/S, or ZP Holding, to pay material judgments or indebtedness, our failure to comply with covenants, ZP SPV or ZP Holding, a failure to maintain a first priority security interest in the collateral, a change of control with respect to ZP SPV or ZP Holding, and bankruptcy and insolvency events. The ZP SPV Notes initially required us to maintain a collateral reserve account securing our payment obligations thereunder, and that such collateral reserve account be funded by certain milestone payments related to both Adlyxin / Lyxumia and Soliqua100/33 / Suliqua. As of December 31, 2016 we had paid DKK 45.8 million ($6.5 million), or 86.5% from royalties received in 2016 in respect of Adlyxin / Lyxumia into a collection account for the purpose of paying interest and principal on the ZP SPV Notes. On March 15, 2017, we amended the ZP SPV Notes to provide for the redemption of $25 million of the ZP SPV Notes at premium of 103% of the notes being redeemed. The amendment to the ZP SPV Notes provides that, following such redemption, the remaining $25 million will be payable in full on March 15, 2021, subject to early redemption rights and conditions that ZP SPV holds as the issuer of the notes. Following our amendment of the ZP SPV Notes and the concurrent redemption, the remaining $26.2 million held as collateral for the ZP SPV Notes in the collateral reserve account was released to us. Additionally, on March 15, 2017, we issued a guarantee in favor of the trustee and the holders of the ZP SPV Notes, guaranteeing the payment and performance by the issuer of the ZP SPV Notes of the secured obligations (as such term is defined in the indenture governing the ZP SPV Notes) thereunder. Until the full repayment of the ZP SPV Notes, we are obliged to pass on a high percentage of all royalty payments related to lixisenatide received under the Sanofi License Agreement to bondholders, and other than for payment of obligations to Alkermes plc, or Alkermes, and one of the inventors of our SIP technology, will not be able to fully utilize royalty payments received from Sanofi. This, in turn, reduces the funds available to finance our internal product projects.

The pricing of our out-licensed products and our product candidates, if and when approved for marketing, will depend in part on pricing strategies adopted by our competitors.

        The pricing of certain of our products and product candidates, if and when approved for marketing, will depend, in part, on the pricing strategies adopted by our competitors. At the end of 2016, Novo Nordisk announced its intention to limit list-price increases of its products, including its insulin pens and needles, to single digit percentages annually, and Eli Lilly stated that from January 1, 2017, Eli Lilly insulin would be provided at discounted prices via mobile and web platforms, reducing costs for people with no insurance or those in the deductible phase of their insurance plans. The impact of these announcements could have a negative impact on companies that are marketing diabetes products. Milestone payments that we received from Sanofi are based in part on sales of Lyxumia / Adlyxin and Soliqua100/33 / Suliqua and under the Sanofi License Agreement. Sanofi determines its own pricing policy in respect of these products. Adoption of a similar pricing policy by Sanofi with respect to its marketed diabetes products, including Lyxumia / Adlyxin and Soliqua100/33 / Suliqua, would limit our net revenue and results.

We may need to raise additional funding, which may not be available on acceptable terms, or at all, and failure to obtain this capital when needed may force us to delay, limit or terminate our product development efforts or other operations.

        We are currently advancing our internal product candidates through clinical development and are conducting preclinical studies with respect to other programs. Developing product candidates is expensive, lengthy and risky, and we expect our R&D expenses to increase in connection with our ongoing activities, particularly as we seek to advance our internal product candidates toward commercialization.

        As of March 31, 2017, our cash and cash equivalents were DKK 410.3 million ($59.0 million) and our restricted cash was DKK 6.7 million ($1.0 million). We estimate that the net proceeds from the offering

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will be approximately $             million, assuming an offering price of $            per ADS (DKK            ), the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen on                        , 2017 of DKK            , at the U.S. dollar/DKK exchange rate of            as of                        , 2017. We expect that the net proceeds from the offering and our existing cash and cash equivalents will be sufficient to fund our current operations for at least the next twelve months. However, our operating plans may change as a result of a variety of factors, and we may need to seek additional funds sooner than planned through public or private equity or debt financings, government or other third party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches.

        Further, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

        Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our shareholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of the ADSs to decline. The sale of additional equity or convertible securities could be dilutive to our shareholders. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we are unable to obtain adequate financing, we may be required to delay, reduce or eliminate the number or scope of our projects and internal product candidates (including our preclinical studies and clinical trial programs). We could also be required to seek funds through arrangements with collaboration partners or at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or internal product candidates or otherwise agree to terms unfavorable to us. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any internal product candidate or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could impair our prospects.

Due to our limited resources and access to capital, we must, as we have in the past, prioritize the development of certain product candidates. These decisions may prove to be wrong and may adversely affect our revenue.

        Because we have limited resources and access to capital to fund our operations, we must decide which product candidates to pursue and the amount of resources to allocate to each such product candidate. As such, we are currently primarily focused on the development of glepaglutide and dasiglucagon. Our decisions concerning the allocation of research, collaboration, management and financial resources toward particular compounds, product candidates or therapeutic areas may not lead to the development of viable commercial products and may divert resources away from better opportunities. Similarly, our potential decisions to delay, terminate or collaborate with third parties in respect of certain product development programs may also prove not to be optimal and could cause us to miss valuable opportunities. If we make incorrect determinations regarding the market potential of our product candidates or misread trends in the pharmaceutical industry, our business, financial position, results of operations and future growth prospects could be materially adversely affected.

We may not be successful in our efforts to use cash flows from our approved out-licensed products to expand our novel, internal target discovery platform to build a pipeline of product candidates.

        A key element of our strategy is to use cash flows from our portfolio of approved, out-licensed drug products to build a pipeline of novel internal product candidates and progress these product candidates

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through clinical development for the treatment of a variety of diseases. Although our research and development, or R&D, efforts to date have resulted in the development of out-licensed product candidates directed at various diseases, we may not be able to develop additional product candidates in a sufficient timeframe, if at all, to provide for the further development of our pipeline of internal product candidates. Our current internal product candidates are in early stages of clinical development and will require substantial further clinical development and testing, and eventually regulatory approval, prior to commercialization. Even if we are successful in continuing to develop our out-licensed pipeline, the potential product candidates that we identify may not be suitable for clinical development, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance. If we do not continue to successfully develop our out-licensed product candidates and if these out-licensed product candidates are not successfully commercialized by our collaboration partners, we will face difficulty in funding our internal pipeline of product candidates and in generally obtaining product revenue in future periods, which could result in significant harm to our financial position and adversely affect the price of the ADSs or our ordinary shares.

Risks Related to Our Products and Product Candidates

We are dependent on the successful commercialization by Sanofi of Adlyxin / Lyxumia and Soliqua100/33 / Suliqua, and the clinical success of our internal product candidates, including glepaglutide and dasiglucagon.

        Our business and future success is highly dependent on Sanofi's ability to successfully commercialize Adlyxin / Lyxumia and Soliqua100/33 / Suliqua and to make payments to us under the Sanofi License Agreement. We are also dependent on our ability to develop successfully, obtain regulatory approval for, and then successfully commercialize our other product candidates, including glepaglutide and dasiglucagon. Our internal product candidates will require additional R&D clinical development, management of clinical and manufacturing activities, regulatory approval in multiple jurisdictions (if regulatory approval can be obtained at all), securing sources of commercial manufacturing supply, building of, or partnering with, a commercial organization, substantial investment and significant marketing efforts before any revenue can be generated from product sales. We are not permitted to market or promote any of our product candidates in any jurisdiction before we receive regulatory approval from the FDA, the EMA or any other comparable regulatory authority in that jurisdiction, and we may never receive such regulatory approval for any of our product candidates in any particular jurisdiction or at all. We cannot assure you that our clinical trials for glepaglutide or dasiglucagon will be completed in a timely manner, or at all, or that we will be able to obtain approval from the FDA, EMA or any other comparable regulatory authority for any of our product candidates. We cannot be certain that we will advance any other product candidates into clinical trials. If Sanofi is unable to successfully commercialize Adlyxin / Lyxumia and Soliqua100/33 / Suliqua, or if any of glepaglutide, dasiglucagon or any future product candidate is not approved and commercialized in any particular jurisdiction, we may not be able to generate any royalties or product revenue, as the case may be, for that product candidate at all or in such jurisdiction. Moreover, any delay or setback in the development of any product candidate could materially adversely affect our business and cause the price of the ADSs or our ordinary shares to fall.

Our product candidates will need to undergo clinical trials that are time consuming and expensive, the outcomes of which are unpredictable, and for which there is a high risk of failure. If clinical trials of our product candidates fail to satisfactorily demonstrate safety and efficacy to the FDA, the EMA and any other comparable regulatory authority, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development of these product candidates.

        The FDA in the United States, the EMA in Europe, and any other comparable regulatory authorities in other jurisdictions must approve new product candidates before they can be marketed, promoted or sold in those territories. We must provide these regulatory authorities with data from preclinical studies and clinical trials that demonstrate that our product candidates are safe and effective for a specific indication

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before they can be approved for commercial distribution. Lyxumia /Adlyxin and Soliqua100/33 / Suliqua are our only approved products. We cannot be certain that our clinical trials for our product candidates will be successful or that any of our other internal or out-licensed product candidates will receive approval from the FDA, the EMA or any other comparable regulatory authority.

        Preclinical studies and clinical trials are long, expensive and unpredictable processes that can be subject to extensive delays. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. It may take several years and require significant expenditures to complete the preclinical studies and clinical trials necessary to commercialize a product candidate, and delays or failure are inherently unpredictable and can occur at any stage. Interim results of clinical trials do not necessarily predict final results, and success in preclinical studies and early clinical trials does not ensure that later clinical trials will be successful. A number of companies in the pharmaceutical, biopharmaceutical and biotechnology industries have suffered significant setbacks in advanced clinical trials even after promising results in earlier trials, and we cannot be certain that we will not face similar setbacks. The design of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced or completed. Changing the design of a clinical trial can be expensive and time consuming. An unfavorable outcome in one or more trials would be a major setback for our product candidates and for us. An unfavorable outcome in one or more trials may require us to delay, reduce the scope of or eliminate one or more product development programs, which could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

        In connection with clinical trials of our product candidates, we face a number of risks, including risks that:

    a product candidate is ineffective, inferior to existing approved products for the same indications, unacceptably toxic or has unacceptable side effects;

    patients may die or suffer other adverse effects for reasons that may or may not be related to the product candidate being tested;

    extension studies on long-term tolerance could invalidate the use of our product;

    the results may not confirm the positive results of earlier trials;

    the results may not meet the level of statistical significance required by the FDA, the EMA or other relevant regulatory agencies to establish the safety and efficacy of our product candidates for continued trial or marketing approval; and

    our collaboration partners or contract research organizations, or CROs, are unable or unwilling to perform under their contracts.

        The results of preclinical studies do not necessarily predict clinical success, and larger and later-stage clinical trials may not produce the same results as earlier-stage clinical trials. Our and our collaboration partners' clinical trials of our product candidates conducted to date have generated favorable safety and efficacy data. However, we may have different enrollment criteria in our future clinical trials. As a result, we may not observe a similarly favorable safety or efficacy profile as in our prior clinical trials. In addition, we cannot assure you that during the course of potential widespread use of any of our product candidates in future, we will not suffer setbacks in maintaining production quality or stability. In addition, clinical trials of potential products often reveal that it is not possible or practical to continue development efforts for these product candidates. If we do not successfully complete preclinical and clinical development, we will be unable to market and sell our product candidates and generate additional revenue. Even if we successfully complete clinical trials, those results are not necessarily predictive of results of additional trials that may be needed before marketing applications may be submitted to the FDA, the EMA or other regulatory authority, as applicable.

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        Furthermore, we sometimes estimate for planning purposes the timing of the accomplishment of various scientific, clinical, regulatory and other product development objectives. These milestones may include our expectations regarding the commencement or completion of scientific studies, clinical trials, the submission of regulatory filings or commercialization objectives. From time to time, we may publicly announce the expected timing of some of these milestones, such as the completion of an ongoing clinical trial, the initiation of other clinical programs, receipt of marketing approval or a commercial launch of a product. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions, which may cause the timing of achievement of the milestones to vary considerably from our estimates. If we fail to achieve announced milestones in the timeframes we expect, the commercialization of our product candidates may be delayed, we may not be entitled to receive certain contractual payments, which could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

The speed at which we complete our preclinical studies and clinical trials depend on many factors, including, but not limited to, patient enrollment.

        Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials and clinicians' and patients' perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating. With respect to our clinical development of glepaglutide in short bowel syndrome, or SBS, the recent availability of Gattex, which is a drug originally developed by NPS Pharmaceuticals, Inc. (and now owned by Shire plc following its acquisition of NPS Pharmaceuticals) for patients with SBS may cause patients to be less willing to participate in our clinical trial. Because there is a relatively limited number of patients worldwide, patient enrollment may be challenging. Any of these occurrences may harm our clinical trials and by extension, our business, financial position, and future growth prospects.

Adlyxin / Lyxumia, Soliqua100/33 / Suliqua or any of our product candidates for which marketing approval is obtained could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to substantial penalties if we or our collaboration partners fail to comply with regulatory requirements or experience unanticipated problems with our products following approval.

        Adlyxin / Lyxumia, Soliqua100/33 / Suliqua or any of our product candidates for which marketing approval is obtained in the future either by us or by our collaboration partners, as well as, among other things, the manufacturing processes, post-approval studies and measures, labeling, advertising and promotional activities for such products, will be subject to the continual requirements of, and review by, the FDA, the EMA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, requirements relating to post-approval studies and measures, labeling, advertising and promotional activities for such products, manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, imposition by the FDA of a Risk Evaluation and Mitigation Strategy, or REMS, and requirements regarding the distribution of samples to physicians and recordkeeping. Even if marketing approval of a product candidate is granted, as it has been by the FDA for Adlyxin and Soliqua100/33 and the EMA for Lyxumia and Suliqua, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval, including the FDA requirement to implement a Risk Evaluation and Mitigation Strategy, if applicable, to ensure that the benefits of a drug or biological product outweigh its risks.

        The FDA, the EMA and other regulatory authorities may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of a product, such as long term observational studies on natural exposure. In respect of our internal product candidates, such

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costs would be our responsibility. The FDA and other agencies, including the Department of Justice, closely regulate and monitor the post-approval marketing and promotion of products to ensure that they are marketed and distributed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA, the EMA and other regulatory authorities impose stringent restrictions on manufacturers' communications regarding off-label use, and, if we or our collaboration partners do not market any of our product candidates for which we receive marketing approval for only their approved indications, we and they may be subject to warnings or enforcement action for off-label marketing. Violation of the Federal Food, Drug and Cosmetic Act or other statutes, including the False Claims Act, relating to the promotion and advertising of prescription drugs may lead to investigations or allegations of violations of federal and state health care fraud and abuse laws and state consumer protection laws.

We selectively rely on third parties to conduct our clinical trials and perform data collection and analysis, which may result in costs and delays that prevent us from successfully commercializing our product candidates.

        We currently, and expect to continue to, selectively rely on public and private research institutions, medical institutions, clinical investigators, CROs, contract laboratories and collaboration partners to conduct some of our early-stage product development activities, perform data collection and analysis and carry out our clinical trials. Our development activities or clinical trials conducted in reliance on third parties may be delayed, suspended or terminated if:

    the third parties do not devote a sufficient amount of time or effort to our activities or otherwise fail to successfully carry out their contractual duties or to meet regulatory obligations or expected deadlines;

    we replace a third party; or

    the quality or accuracy of the data obtained by third parties is compromised due to their failure to adhere to clinical protocols, regulatory requirements or for other reasons.

        We do not have the ability to control the performance of third parties in their conduct of development activities. Third party performance failures may increase our development costs, delay our ability to obtain regulatory approval and delay or prevent the commercialization of our product candidates. While we believe that there are alternative sources to provide these services, in the event that we seek such alternative sources, we may not be able to enter into replacement arrangements without incurring delays or additional costs.

We rely on third parties to manufacture our preclinical and clinical drug supplies and we intend to rely on third parties to produce commercial supplies of any approved product candidate.

        If, for any reason, we were to experience an unexpected loss of supply of our product candidates or placebo or comparator drug used in certain of our clinical trials, whether as a result of manufacturing, supply or storage issues or otherwise, we could experience delays, disruptions, suspensions or terminations of, or be required to restart or repeat, any pending or ongoing clinical trials. We do not currently have, nor do we plan to acquire, the infrastructure or capability internally to manufacture our preclinical and clinical drug supplies and we lack the resources and the capability to manufacture any of our product candidates on a clinical or commercial scale. The facilities used by our contract manufacturers or other third party manufacturers to manufacture our product candidates are subject to the FDA's, the EMA's and other comparable regulatory authorities' preapproval inspections that will be conducted after we submit our NDA to the FDA or the required approval documents to any other relevant regulatory authority. We do not control the implementation of the manufacturing process of, and are completely dependent on, our contract manufacturers or other third party manufacturers for compliance with the regulatory requirements, known as current good manufacturing practices, or cGMPs, for manufacture of both active drug substances and finished drug products. If our contract manufacturers or other third party manufacturers cannot successfully manufacture material that conforms to applicable specifications and the

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strict regulatory requirements of the FDA, the EMA or other comparable regulatory authority, we will not be able to secure and/or maintain regulatory approvals for our products manufactured at these facilities. In addition, we have no control over the ability of our contract manufacturers or other third party manufacturers to maintain adequate quality control and quality assurance procedures and qualified personnel. If the FDA, the EMA or another comparable regulatory authority finds deficiencies at these facilities for the manufacture of our product candidates or if it withdraws any approval because of deficiencies at these facilities in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.

        We rely on our manufacturers to purchase from third party suppliers the materials necessary to produce our product candidates for our clinical trials. There are a limited number of suppliers for raw materials that we use to manufacture our drugs and there may be a need to assess alternate suppliers to prevent a possible disruption of the manufacture of the materials necessary to produce our product candidates for our clinical trials, and if approved, for commercial sale. We do not have any control over the process or timing of the acquisition of these raw materials by our manufacturers. Moreover, we currently do not have any agreements in place for the commercial production of these raw materials. Although we generally do not begin a clinical trial unless we believe we have access to a sufficient supply of a product candidate to complete the clinical trial, any significant delay in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to replace a contract manufacturer or other third party manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our product candidates. If our manufacturers or we are unable to purchase these raw materials after regulatory approval has been obtained for our product candidates, the commercial launch of our product candidates would be delayed or there would be a shortage in supply, which would impair our ability to generate revenue from the sale of our product candidates. Additionally, if we receive regulatory approval for our product candidates, we may experience unforeseen difficulties or challenges in the manufacture of our product candidates on a commercial scale compared to the manufacture for clinical purposes.

We face substantial competition from companies with considerably more resources and experience than we have, which may result in others discovering, developing, receiving approval for or commercializing products before or more successfully than us.

        The pharmaceutical and biotechnology industries are characterized by intense competition and significant and rapid technological change as researchers learn more about diseases and develop new technologies and treatments. Any product candidates that we successfully develop and commercialize will compete with existing drugs and new drugs that may become available in the future. We have competitors in each of the disease fields in which we compete, many of which have substantially greater name recognition, commercial infrastructure and financial, technical and personnel resources than we have. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with larger and established companies. Significant competitive factors in our industry include product efficacy and safety, quality and breadth of an organization's technology, skill of an organization's employees and its ability to recruit and retain key employees, timing and scope of regulatory approvals, government reimbursement rates for, and the average selling price of, products, the availability of raw materials and qualified manufacturing capacity, manufacturing costs, intellectual property and patent rights and their protection and sales and marketing capabilities. While we believe that our product and product candidate platform, development expertise and scientific knowledge provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions. In particular, we compete with all companies that have drugs on the market or are developing product candidates for diabetes. Our competitors in the type 2 diabetes field are primarily large pharmaceutical companies, including

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Merck & Co., Inc., AstraZeneca, GlaxoSmithKline, Eli Lilly, Sanofi, Novo Nordisk, Johnson & Johnson and BI. This competition includes a number of alternative therapies to combat type 2 diabetes that are being researched and are in various stages of development. Should these therapies prove effective, it could reduce the potential size of the market for our drugs. Adlyxin / Lyxumia faces direct competition from other drugs including: Victoza, developed by Novo Nordisk, and Trulicity, developed by Eli Lilly while Soliqua100/33 / Suliqua faces direct competition from Novo Nordisk's Xultophy. There can be no assurance that our competitors will not deploy their superior resources to damage our and our drug candidates' prospects. Given the intense competition in our industry, we cannot assure you that any of the products that we successfully develop will be clinically superior or scientifically preferable to products developed or introduced by our competitors.

        In addition, significant delays in the development of our product candidates could allow our competitors to succeed in obtaining the FDA, the EMA or other regulatory approvals for their product candidates more rapidly than us, which could place us at a significant competitive disadvantage or deny us marketing exclusivity rights.

        Competitors may develop novel products or other technologies that could make our product candidates obsolete or uneconomical. Any of our product candidates that competes with an approved product may need to demonstrate compelling advantages, such as increased efficacy, convenience, pricing, tolerability and/or safety in order to be commercially successful. Any of our product candidates that are approved could also face other competitive factors in the future, including biosimilar competition, which could force us to lower prices or could result in reduced sales. Any failure to compete effectively against our current and future competitors could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

        In addition, many of our competitors have significantly greater financial resources and expertise in R&D, manufacturing, conducting preclinical studies and clinical trials, obtaining regulatory approvals and marketing drugs. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of competitors, particularly through partnership arrangements with large established companies. These companies also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Adverse safety events involving Adlyxin / Lyxumia, Soliqua100/33 / Suliqua or our product candidates can negatively affect our business and stock price.

        Adverse safety events involving Adlyxin / Lyxumia, Soliqua100/33 / Suliqua or any of our product candidates which may receive marketing approval in the future may have a negative impact on our commercialization efforts. Later discovery of safety issues with Adlyxin / Lyxumia, Soliqua100/33 / Suliqua or our other product candidates that were not known at the time of their approval by the FDA or comparable regulatory agencies in other countries could cause product liability litigation exposure, additional regulatory scrutiny and requirements for additional labeling, limitations upon patient, prescriber and/or physician access, imposition of a risk evaluation and mitigation strategy by the FDA, withdrawal of products from the market and the imposition of fines or criminal penalties. Any of these actions could result in material impairments of fixed assets, material restructuring charges and other adverse impacts on our results of operations. In addition, the reporting of adverse safety events involving our products and public rumors about such events could cause our stock price to decline or experience periods of volatility.

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If the FDA, the EMA or other comparable foreign regulatory authority approves generic versions of Adlyxin / Lyxumia, Soliqua100/33 / Suliqua or any of our product candidates that receive marketing approval, or such authorities do not grant our or our collaboration partners' product candidates appropriate periods of data exclusivity before approving generic versions of our or our collaboration partners' products, the sales of such products could be adversely affected.

        Once an NDA is approved, the product covered thereby becomes a "reference listed drug" in the FDA's publication, "Approved Drug Products with Therapeutic Equivalence Evaluations." Manufacturers may seek approval of generic versions of reference listed drugs through submission of abbreviated new drug applications, or ANDAs, in the United States. In support of an ANDA, a generic manufacturer need not conduct clinical studies. Rather, the applicant generally must show that its product has the same active ingredient(s), dosage form, strength, route of administration and conditions of use or labeling as the reference listed drug and that the generic version is bioequivalent to the reference listed drug, meaning it is absorbed in the body at the same rate and to the same extent. Generic products may be significantly less costly to bring to market than the reference listed drug and companies that produce generic products are generally able to offer them at lower prices. Thus, following the introduction of a generic drug, a significant percentage of the sales of any branded product or reference listed drug may be typically lost to the generic product.

        The FDA may not approve an ANDA for a generic product until any applicable period of non-patent exclusivity for the reference listed drug has expired. The Federal Food, Drug, and Cosmetic Act provides a period of five years of non-patent exclusivity for a new drug containing a new chemical entity, or NCE. Specifically, in cases where such exclusivity has been granted, an ANDA may not be filed with the FDA until the expiration of five years unless the submission is accompanied by a Paragraph IV certification that a patent covering the reference listed drug is either invalid or will not be infringed by the generic product, in which case the applicant may submit its application four years following approval of the reference listed drug. It is unclear whether the FDA will treat the active ingredients in our or our collaboration partners' product candidates as NCEs and, therefore, afford them five years of NCE data exclusivity if they are approved. If any product we or our collaboration partners on our behalf develop does not receive five years of NCE exclusivity, it may nonetheless be eligible for three years of exclusivity, which means that the FDA may approve generic versions of such product three years after its date of approval. Manufacturers may seek to launch these generic products following the expiration of the applicable marketing exclusivity period, even if we still have patent protection for our product.

        Competition that Adlyxin / Lyxumia, Soliqua100/33 / Suliqua or any future product candidates that may be approved for marketing may face from generic versions of our or our partnered products could materially and adversely impact our future revenue, profitability and cash flows and substantially limit our ability to obtain a return on the investments we have made in any such product candidate.

Certain of our peptide product candidates are expected to be delivered parenterally by medical devices that may be regulated as combination products that are required to obtain separate FDA clearance or pre-market approval and/or approval by other regulatory authorities.

        Certain of our peptide product candidates are intended to be used in combination with a delivery device, such as an injector or other delivery system. Medical products containing a combination of new drugs, biological products or medical devices may be regulated as "combination products" in the United States and Europe. A combination product generally is defined as a product comprised of components from two or more regulatory categories (e.g., drug/device, device/biologic, drug/biologic). Each component of a combination product is subject to the requirements established by the FDA for that type of component, whether a new drug, biologic or device. In order to facilitate pre-market review of combination products, the FDA designates one of its centers to have primary jurisdiction for the pre-market review and regulation of the overall product based upon a determination by the FDA of the primary mode of action of the combination product. The determination whether a product is a

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combination product or two separate products is made by the FDA on a case-by-case basis. Our product candidates intended for use with such devices, or expanded indications that we may seek for our products used with such devices, may not be approved or may be substantially delayed in receiving approval if the devices do not gain and/or maintain their own regulatory approvals or clearances. Where approval of the drug or biologic product and device is sought under a single application, the increased complexity of the review process may delay approval. The FDA review process and criteria is not a well-established area, which could also lead to delays in the approval process. The EMA has a parallel review process in place for combination products, the potential effects of which in terms of approval and timing could independently affect our ability to market our combination products in Europe. In addition, because these delivery devices are provided by unaffiliated third party companies, we are dependent on the sustained cooperation and effort of those third party companies both to obtain regulatory approval and to maintain their own regulatory compliance. Failure of third party companies to assist in the approval process or to maintain their own regulatory compliance could delay or prevent approval of our product candidates, or limit our ability to sell a product once approved.

Our product candidates are complex to manufacture, and we or our collaboration partners may encounter difficulties in production that could have a material adverse effect on our business and financial results.

        Our products must be made consistently and in compliance with a clearly defined manufacturing process. In addition, due to their complex structure, efficient large-scale production of peptide product candidates is challenging. As a result of such complexity, the production of peptide product candidates typically requires more chemical steps than the production of traditional small molecule products.

        Accordingly, it is essential to be able to validate and control the manufacturing process to ensure that it is reproducible. Slight deviations anywhere in the manufacturing process, including obtaining materials, filling, labeling, packaging, storage and shipping and quality control and testing, some of which all pharmaceutical companies, including our collaboration partners and us, experience from time to time, may result in batch failures, delay in the release of batches, product recalls or spoilage. If microbial, viral or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remove the contamination. Further, as product candidates are developed through preclinical studies to late-stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods, are altered along the way in an effort to optimize processes and results. Such changes carry the risk that they will not achieve these intended objectives, and any of these changes could cause our product candidates to perform differently and affect the results of ongoing clinical trials or other future clinical trials. Any failure to manufacture products up to regulatory standards could lead to increased costs due to duplicative or replacement manufacturing, product recalls or a loss of revenue and reputation.

        At present, all manufacturing of our marketed product is undertaken by Sanofi under the Sanofi License Agreement. Any inability of Sanofi to adequately address the risks associated with the manufacturing process or to use cost-effective manufacturing methods, or otherwise not comply with cGMPs and other requirements, may significantly limit the commercial competitiveness of our product candidates marketed by Sanofi. This inability could also result in regulatory enforcement, legal action and other adverse consequences. This could reduce sales of such products and, in turn, the royalty payments due to us under the Sanofi License Agreement, which could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

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We currently have no sales function. If we are unable to establish a sales function or enter into sales, marketing and distribution arrangements with third parties, we may not be successful in commercializing our internal product candidates if and when they are approved.

        We do not have a sales or marketing infrastructure and have no experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for any internal product candidate for which we obtain marketing approval, we will need to establish a sales and marketing function or make arrangements with third parties to perform sales and marketing functions on our behalf, and we may not be successful in doing so.

        If we enter into arrangements with third parties to perform sales, marketing and distribution services on our behalf, our product revenue or the profitability of our drug revenue may be lower, perhaps substantially lower, than if we were to directly market and sell our drugs. Furthermore, we may be unsuccessful in entering into the necessary arrangements with third parties or may be unable to do so on terms that are favorable to us.

        Even if we are able to enter into acceptable partnerships, we may have little or no control over such third parties, and our future collaboration partners may fail to devote the necessary resources and attention to sell and market our drugs effectively. Budgeting restrictions or strategy changes of our future collaboration partners could delay or prevent successful clinical development or marketing efforts. Similarly, our future collaboration partners could decide to give priority to the clinical development or marketing of product candidates or develop or seek to develop product candidates in competition with our product candidates.

        Our failure to establish and maintain successful partnerships could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

Risks Related to Our Operations

There is a risk that our products may have major side effects that may give rise to substantial liability claims.

        As a biopharmaceutical company, we operate in a market that is subject to risk of liability. To our knowledge, we are not currently subject to any product liability suits. However, we may be subject to future liability claims alleging adverse effects from clinical trials or the use of our products. Any liability claims could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

There is a risk that we may not be able to maintain insurance coverage, and that existing or any future insurance policies or our own resources will not sufficiently cover claims for damages that we may receive in the future.

        Our business exposes us to potential product liability and other liability risks that are inherent in clinical development, manufacturing, marketing and use of human therapeutic products. It is generally necessary for us to secure certain levels of insurance as a condition for the conduct of clinical trials and any sale or use of our products. We have taken out product liability insurance with respect to all clinical trials and ongoing trials performed to date for which we were responsible (i.e., in respect of our internal product pipeline).

        We may seek to expand our insurance coverage if we obtain marketing approval for any of our internal product candidates or if other risks related to our business increase. We may not be able to obtain or maintain adequate protection against potential liabilities at a cost that is acceptable to us. If we are unable to obtain insurance or other protection against potential product liability claims, we could be exposed to significant liabilities, which may materially and adversely affect our business and financial position. These liabilities could prevent or interfere with our product development and commercialization efforts. If we are sued for any injury caused by our products or processes, our liability could exceed our product liability insurance coverage and our own financial resources and, consequently, could have a

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material adverse effect on our business, financial position, results of operations and future growth prospects.

Our future success depends on our ability to retain our management team and key employees.

        We are highly dependent on the management, development, clinical, financial and business development expertise of our management team and key employees. Recruiting and retaining qualified scientific and clinical personnel will also be critical to our future success. The loss of the services of any of the members of our management team or key employees could impede the achievement of our development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing any of the members of our management team or key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval for and commercialize drugs. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate the members of our management team or key employees on acceptable terms given the competition among numerous pharmaceutical, biopharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. If we are unable to continue to attract and retain high quality management and employees, our ability to pursue our growth strategy will be limited.

Our R&D activities could be affected or delayed as a result of possible restrictions on animal testing.

        Certain laws and regulations require us to test our product candidates on animals before initiating clinical trials involving humans. Animal testing activities have been the subject of controversy and adverse publicity. Animal rights groups and other organizations and individuals have attempted to stop animal testing activities by pressing for legislation and regulation in these areas and by disrupting these activities through protests and other means. To the extent the activities of these groups are successful, our R&D activities may be interrupted, delayed or become more expensive.

If we fail to manage our growth effectively, our ability to develop and commercialize products could suffer.

        We expect that if our drug discovery efforts continue to generate product candidates, our clinical product candidates continue to progress in development, and we continue to build our development and commercial organizations, we will require significant additional investment in personnel, management and resources. Our ability to achieve our research, development and commercialization objectives depends on our ability to respond effectively to these demands and expand our internal organization, systems, controls and facilities to accommodate additional anticipated growth. If we are unable to manage our growth effectively, our business could be harmed and our ability to execute our business strategy could suffer.

We may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions.

        Should attractive opportunities arise, we may acquire companies or technologies facilitating our access to new medicines, new research projects or new geographical areas, or enabling us to achieve synergies with our existing operations. However, we may not be able to identify appropriate targets or make acquisitions under satisfactory conditions, in particular, satisfactory price conditions. In addition, we may be unable to obtain the financing for these acquisitions under favorable conditions and could be led to finance these acquisitions using cash that could be allocated to other purposes in the context of existing operations or equity issuances, which could be dilutive to our ordinary shareholders, including those purchasing securities in this offering. If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of acquiring such businesses if we are unable to successfully integrate them with our existing operations and company culture. We may encounter numerous difficulties in

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developing, manufacturing and marketing any new products resulting from a strategic alliance or acquisition that delay or prevent us from realizing their expected benefits or enhancing our business. We cannot assure you that, following any such acquisition, we will achieve the expected synergies to justify the transaction, which could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

Our internal computer systems, or those of our collaboration partners or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.

        Our internal computer systems and those of our current and any future collaboration partners and other contractors or consultants are vulnerable to damage from cyber security breaches, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we do not believe that we have experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions. For example, the loss of clinical trial data for our product candidates from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications or other data or applications relating to our technology or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed.

Our operations as a global company subject us to various risks, and our failure to manage these risks could adversely affect our results of operations.

        We face significant operational risks as a result of doing business internationally, such as:

    fluctuations in foreign currency exchange rates (in particular, U.S. dollars, Euros and Danish kroner);

    potentially adverse and/or unexpected tax consequences, including penalties due to the failure of tax planning or due to the challenge by tax authorities on the basis of transfer pricing and liabilities imposed from inconsistent enforcement;

    potential changes to the accounting standards, which may influence our financial situation and results;

    becoming subject to the different, complex and changing laws, regulations and court systems of multiple jurisdictions and compliance with a wide variety of foreign laws, treaties and regulations;

    reduced protection of, or significant difficulties in enforcing, intellectual property rights in certain countries;

    restrictions imposed by local labor practices and laws on our business and operations, including unilateral cancellation or modification of contracts;

    rapid changes in global government, economic and political policies and conditions, political or civil unrest or instability, terrorism or epidemics and other similar outbreaks or events, and potential failure in confidence of our suppliers or customers due to such changes or events; and

    tariffs, trade protection measures, import or export licensing requirements, trade embargoes and other trade barriers.

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        In addition, as a result of this listing, we will become subject to the Foreign Corrupt Practices Act, or the FCPA, which generally prohibits companies and their intermediaries from making or offering improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The FCPA generally also requires companies listed on a U.S. stock exchange to maintain a system of adequate internal accounting controls and to make and keep books, records and accounts that accurately and fairly reflect transactions and dispositions of assets. Because of the predominance of government-sponsored health care systems around the world, many of our commercial relationships outside of the United States are with governmental entities, and personnel of such entities may be considered non-U.S. officials for purposes of the FCPA. Violations of the FCPA and other applicable anti-bribery laws are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures. We have adopted a written code of business conduct and other policies and procedures to assist us and our personnel in complying with the FCPA and other applicable anti-bribery laws prior to completion of the offering. However, our personnel and others acting on our behalf could take actions that violate these requirements, which could adversely affect our reputation, business, financial condition and results of operations.

Risks Related to Our Intellectual Property

Our ability to compete may decline if we or our collaboration partners are unable to or do not adequately protect intellectual property rights or if our intellectual property rights are inadequate for our product candidates or future product candidates

        Our commercial success and viability depends on our and our collaboration partners' ability to obtain and maintain patent protection in the United States, Europe and other countries with respect to our existing product candidates owned by us and to successfully defend these rights against third party challenges, as well as our ability to maintain adequate intellectual property protection for any future products. If we or our collaboration partners do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could materially harm our business, negatively affect our position in the marketplace, limit our ability to commercialize our product candidates and delay or render impossible our achievement of profitability.

        Our strategy and future prospects are based, in particular, on our patent portfolio. We and our collaboration partners or licensees will best be able to protect our product candidates and their uses from unauthorized use by third parties to the extent that valid and enforceable patents, effectively protected trade secrets, or other regulatory exclusivities, cover them. Also, intellectual property rights have limitations and do not necessarily address all potential threats to our competitive advantage. Our ability to obtain patent protection for our product candidates is uncertain and the degree of future protection afforded by our intellectual property rights is uncertain due to a number of factors, including, but not limited to:

    we or our collaboration partners may not have been the first to make the inventions covered by pending patent applications or issued patents;

    we or our collaboration partners may not have been the first to file patent applications for our product candidates or the compositions we developed or for their uses;

    others may independently develop identical, similar or alternative products or compositions and uses thereof;

    our or our collaboration partners' disclosures in patent applications may not be sufficient to meet the statutory requirements for patentability;

    any or all of our or our collaboration partners' pending patent applications may not result in issued patents;

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    we or our collaboration partners may not seek or obtain patent protection in countries that may eventually provide us with a significant business opportunity;

    any patents issued to us or our collaboration partners may not provide a basis for commercially viable products, may not provide any competitive advantages, or may be successfully challenged by third parties;

    our or our collaboration partners' compositions and methods may not be patentable;

    others may design around our or our collaboration partners' patent claims to produce competitive products or uses which fall outside of the scope of our patents;

    others may identify prior art or other bases which could invalidate our or our collaboration partners' patents;

    our competitors might conduct R&D activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain R&D activities, as well as in countries where we or our collaboration partners do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; or

    we may not develop additional proprietary technologies that are patentable.

Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court.

        Even if our patents do successfully issue and even if such patents cover our product candidates and methods of use, third parties may initiate interference, re-examination, post-grant review, inter partes review, or derivation actions in the U.S. Patent and Trademark Office, or USPTO, may initiate third party oppositions in the European Patent Office, or EPO, or similar actions challenging the validity, enforceability or scope of such patents in other patent administrative proceedings worldwide, which may result in our patent claims being narrowed or invalidated. Such proceedings could result in revocation or amendment of our patents in such a way that they no longer cover our product candidates or competitive products. Further, if we initiate legal proceedings against a third party to enforce a patent covering our product candidate or technology, the defendant could counterclaim that the patent covering our product candidate or technology is invalid or unenforceable. In patent litigation in the United States, certain European and other countries worldwide, it is commonplace for defendants to make counterclaims alleging invalidity and unenforceability in the same proceeding, or to commence parallel defensive proceedings such as patent nullity actions to challenge validity and enforceability of asserted patent claims.

        In administrative and court actions, grounds for a patent validity challenge may include alleged failures to meet any of several statutory requirements, including lack of novelty, obviousness (lack of inventive step) and in some cases, lack of sufficiently teaching, or non-enablement of, the claimed invention. Grounds for unenforceability assertions include allegations that someone connected with prosecution of the patent withheld relevant information from the Examiner during prosecution in the USPTO, or made a misleading statement during prosecution in the USPTO, the EPO or elsewhere. Third parties may also raise similar claims before administrative bodies in the USPTO or the EPO, even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to validity, for example, we cannot be certain that there is no invalidating prior art, of which we or the patent examiner were unaware during prosecution. Further, we cannot be certain that all of the potentially relevant art relating to our patents and patent applications has been cited in every patent office. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates.

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We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful and have a material adverse effect on the success of our business.

        Competitors may infringe our patents, trademarks, copyrights or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims on a country-by-country basis, which can be expensive and time consuming and divert the time and attention of our management and scientific personnel. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents, in addition to counterclaims asserting that our patents are invalid or unenforceable, or both. In any patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue. There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent's claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patent claims do not cover the invention. An adverse outcome in a litigation or proceeding involving one or more of our patents could limit our ability to assert those patents against those parties or other competitors, and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks.

        Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could adversely affect the market price of the ADSs. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

Claims that our product candidates or their uses infringe the intellectual property rights of third parties could result in costly litigation, and unfavorable outcomes could require us to pay damages or royalties and could limit our R&D activities or our ability to commercialize certain products.

        Even if we have or obtain patents covering our product candidates, compositions or uses, we may still be barred from making, using, importing or selling our product candidates or technologies because of the patent rights of others. Others have filed, and in the future may file, patent applications covering compositions or products and uses that are similar or identical to ours. There are many issued U.S., European and other worldwide patents relating to therapeutic drugs, and some of these relate to compounds we intend to commercialize. Numerous worldwide patents and pending patent applications owned by others exist in the metabolic disease, gastrointestinal disease and cardiovascular disease field and cover, among others, GLP-2 product candidates which we are developing. We cannot guarantee that our products, compositions and their uses do not or will not infringe third party patent or other intellectual property rights. Because patent applications can take 18 months to publish and many years to issue, there may be currently pending applications with patent claims unknown to us or which will change over time and may later result in issued patents that purportedly cover our product candidates or compositions and uses. These patent applications may have been filed earlier than or have priority over patent applications filed by us. We may be required to develop or obtain alternative technologies, review product design or, in the case of claims concerning registered trademarks, rename our product candidates.

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        Claims that our or our collaboration partners' products, compositions or their uses infringe or interfere with the patent rights of third parties, or that we or our collaboration partners have misappropriated third party trade secrets, could result in costly litigation and could require substantial time and money to resolve, even if litigation were avoided. The basis of such litigation could be existing patents or patents that are granted in the future. If we or our collaboration partners were to face infringement claims or challenges by third parties, an adverse outcome could subject us or our collaboration partners to significant liabilities to such third parties. Litigation or threatened litigation could result in significant demands on the time and attention of our management team. A negative outcome could expose us or our collaboration partners to payment of costs, damages and other financial remedies, including in some jurisdictions, increased damages, such as treble damages and attorneys' fees, if found to have willfully infringed a patent. Litigation with third parties concerning alleged infringement of their intellectual property rights could require us and our collaboration partners to bear substantial costs and impose burdens on our and their management and personnel, even if we or our collaboration partners were to ultimately succeed in such proceedings. Costs of patent litigation and awards of damages in patent infringement cases can be significant, and equitable remedies such as temporary restraining orders and injunctions can negatively impact or prevent product development and commercialization. In light of these risks, settlements are often a preferred alternative, to avoid litigation uncertainties and costs, even when there are strong defenses to claims that are made. A negative outcome, potential or actual, could cause us or our collaboration partners to pursue contractual and other remedies against each other; in particular, our license agreements generally allow our collaboration partners to reduce amounts we are owed as royalties and/or milestones by amounts paid to third parties as a result of or in settlement of certain infringement claims, subject to contractual conditions and limitations. We or our collaboration partners could also face equitable remedies, such as being forced, including by court order, to cease developing, manufacturing, importing or commercializing an infringing product candidate or product in one or more jurisdictions. A negative outcome could also lead us or our collaboration partners to delay, curtail or cease the development and commercialization of some or all of our candidate drugs, or could cause us or our collaboration partners to seek legal or administrative actions against third parties. We or our collaboration partners may need to obtain licenses from third parties and such licenses may not be available on commercially reasonable terms, or at all. Even if we or our collaboration partners are able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same rights licensed to us. In addition, even if we or our collaboration partners were ultimately to succeed in asserting one or more patent defenses in an infringement suit, or to settle at an early stage to avoid litigation uncertainties and costs despite having strong patent defenses, such litigation could burden us and our collaboration partners with substantial unanticipated costs and damages. A negative outcome could cause us or our collaboration partners to pursue contractual remedies against each other, including, for example, over settlement or license related payments or royalty reductions.

Biopharmaceutical patents and patent applications involve highly complex legal and factual questions, which, if determined adversely to us, could negatively impact our patent position.

        The patent positions of biopharmaceutical companies can be highly uncertain and involve complex legal and factual questions. The interpretation and breadth of claims allowed in some patents covering biopharmaceutical compositions may be uncertain and difficult to determine, and are often affected materially by the facts and circumstances that pertain to the patented compounds, compositions and related patent claims. The standards of the USPTO, the EPO and other international patent offices are evolving and could change in the future. Consequently, we cannot predict the issuance and scope of patents with certainty. Patents, if issued, may be challenged, invalidated or circumvented. European patents and patents in certain other jurisdictions are subject to third party opposition proceedings. U.S. patents and patent applications may also be subject to interference proceedings, and U.S. patents may be subject to reexamination proceedings, post-grant review and/or inter partes review in the USPTO. The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability and our patents

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or pending patent applications may be challenged in the courts or patent offices in the United States, Europe and elsewhere worldwide. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found. For example, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned and licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions. If such prior art exists, it may be used to invalidate a patent, or may prevent a patent from issuing from a pending patent application. For example, such patent filings may be subject to a third party pre-issuance submission of prior art to the USPTO, EPO or to other patent offices around the world. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights may be uncertain. Our pending and future patent applications may not result in patents being issued that protect our technology or products, in whole or in part, or may not effectively prevent others from commercializing competitive technologies and products. For example, such patent filings may be subject to a third party preissuance submission of prior art to the USPTO, the EPO or to other patent offices around the world. Alternately or additionally, we may become involved in post-grant review procedures, oppositions, derivations, proceedings, reexaminations, inter partes review or interference proceedings, in the United States or elsewhere, challenging patents or patent applications in which we have rights, including patents on which we rely to protect our business. An adverse determination in any such challenges may result in loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. European patents or patents in other jurisdictions may be subject also to administrative opposition or comparable proceedings in corresponding worldwide patent offices, which could result in either loss of the patent or denial of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, such interference, reexamination, post-grant review, inter partes review and opposition proceedings may be time consuming and costly. Also, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates may expire before or shortly after such candidates are commercialized. Accordingly, rights under any issued patents may not provide us with sufficient protection against competitive products or processes.

        In addition, changes in or different interpretations of patent laws in the United States, Europe and other countries worldwide may diminish the value of our patents or narrow the scope of our patent protection, while patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. For example, changes in or different interpretations of patent laws in the United States, Europe and other countries worldwide may permit others to use our or our collaboration partners' discoveries or to develop and commercialize our technology and products without providing any compensation to us, or may limit the number of patents or claims we can obtain. The laws of some countries may not protect intellectual property rights to the same extent as the laws of the United States or Europe, and those countries may lack adequate rules and procedures for defending our intellectual property rights, or vice versa.

        If we fail to obtain and maintain patent protection and trade secret protection for our product candidates, we could lose our competitive advantage and competition we face would increase, reducing any potential revenue and adversely affecting our ability to attain or maintain profitability.

If we are unable to protect the confidentiality of our trade secrets and know-how, our business and competitive position would be harmed.

        In addition to seeking patent protection for our product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and

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confidentiality agreements with parties who have access to them, such as our employees, collaboration partners, consultants, advisors, university and/or institutional researchers and other third parties. We also have entered or seek to enter into confidentiality and invention or patent assignment agreements with our employees, advisors and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Our trade secrets may also be obtained by third parties by other means, such as breaches of our physical or computer security systems. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. Moreover, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to, or independently developed by, a competitor, our competitive position would be harmed.

Developments in patent law in the United States and other jurisdictions could have a negative impact on our business.

        As is the case with other biopharmaceutical companies, our success is heavily dependent on our intellectual property, particularly our patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain.

        From time to time, the Supreme Court, other federal courts, Congress, the USPTO or similar foreign authorities may change the standards of patentability and any such changes could have a negative impact on our business. In addition, the Leahy-Smith America Invents Act, or the America Invents Act, which was signed into law on September 16, 2011, includes a number of significant changes to U.S. patent law. These changes include a transition from a "first-to-invent" system to a "first-to-file" system, changes to the way issued patents are challenged, and changes to the way patent applications are disputed during the examination process. These changes may favor larger and more established companies that have greater resources to devote to patent application filing and prosecution. The USPTO has developed new regulations and procedures to govern the full implementation of the America Invents Act, and many of the substantive changes to patent law associated with the America Invents Act, and, in particular, the first-to-file provisions, became effective on March 16, 2013. Substantive changes to patent law associated with the America Invents Act, or any subsequent U.S. legislation regarding patents, may affect our ability to obtain patents, and if obtained, to enforce or defend them. Accordingly, it is not clear what, if any, impact the America Invents Act will have on the cost of prosecuting our U.S. patent applications, our ability to obtain U.S. patents based on our discoveries and our ability to enforce or defend any patents that may issue from our patent applications, all of which could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

We will not seek to protect our intellectual property rights in all jurisdictions throughout the world, and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.

        Obtaining and maintaining a patent portfolio entails significant expense and resources. Part of the expense includes periodic maintenance fees, renewal fees, annuity fees, various other governmental fees on patents or applications due in several stages over the lifetime of patents or applications, as well as the cost associated with complying with numerous procedural provisions during the patent application process. Filing, prosecuting and defending patents on our product candidates in all countries and jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States and Europe could be less extensive than those in the United States and in Europe, assuming that rights are obtained in the United States or in Europe. We may choose not to

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pursue or maintain protection for particular inventions. In addition, there are situations in which failure to make certain payments or noncompliance with certain requirements in the patent process can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If we choose to forego patent protection or allow a patent application or patent to lapse purposefully or inadvertently, our competitive position could suffer. Competitors may use our technologies in jurisdictions where we do not pursue and obtain patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States or in Europe. These products may compete with our product candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties from so competing.

        In addition, the laws of some countries do not protect intellectual property rights to the same extent as the federal and state laws in the United States and Europe. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to biopharmaceuticals or biotechnologies. This could make it difficult for us to stop the infringement of our patents, if obtained, or the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries. Proceedings and legal actions to enforce our patent rights in the United States or in Europe and in foreign jurisdictions can be expensive, could result in substantial costs, and could divert management time and our efforts and attention from other aspects of our business. In addition, such proceedings or legal actions could put our patents at risk of being invalidated, found unenforceable or interpreted narrowly, could put our patent applications at risk of not being issued and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. We may or may not choose to pursue litigation or other actions against those that have infringed our patents, or used them without authorization, due to the associated expense and time commitment of monitoring these activities. If we fail to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could harm our results of operations.

        In addition, changes in the law and legal decisions by courts in the United States, Europe and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of intellectual property. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Patent terms and regulatory exclusivities may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.

        Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. We expect to seek extensions of patent terms in the United States and, if available, in other countries where we have patents.

        Depending upon the timing and duration of the U.S. regulatory review process and patent life considerations, certain of our U.S. patents may be eligible for patent term extension under the Drug Price

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Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments. The Hatch-Waxman Amendments provide up to five years of patent term extension, or PTE, on a patent that covers an approved product or method of use as compensation for patent term lost during the FDA regulatory review process. Patent term restoration cannot extend the term of a patent beyond a total of 14 years from the product's approval date. Only one patent with a claim covering an approved drug or method is eligible for the extension, and the extension must be applied for prior to the patent expiration date (which due date may be extended by submission of one or more applications for interim extensions for periods of up to one year each and cannot be extended longer than the maximum period of patent term extension). The USPTO, in consultation with the FDA, reviews and approves a request for patent term extension or restoration and calculates the PTE period that will be awarded. PTE only extends patent coverage on the approved product or method of use.

        In certain Member States of the EU, patent term extensions may be obtained through a Supplementary Protection Certificate, or SPC, to recover some of the time lost between the patent application filing date and the date of first regulatory approval, up to a maximum term of five years. Up to five years of patent term extension are also available in Japan for patent term recovery related to the pharmaceutical regulatory review and approval process.

        Applicable authorities, including the FDA/USPTO in the United States, and comparable regulatory authorities and intellectual property offices in other EU countries and worldwide, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case.

Third parties may challenge the inventorship of our patent filings and other intellectual property or may assert ownership or commercial rights to inventions we develop.

        Third parties may in the future make claims challenging the inventorship or ownership of our intellectual property. We have written agreements with collaboration partners that provide for the ownership of intellectual property arising from our collaborations. These agreements provide that we or our licensees must negotiate certain commercial rights with collaboration partners with respect to joint inventions or inventions made by our collaboration partners that arise from the results of the collaboration. In some instances, there may not be adequate written provisions to address clearly the resolution of intellectual property rights that may arise from collaboration. If we or our licensees cannot successfully negotiate sufficient ownership and commercial rights to the inventions that result from our use of a third party collaboration partner's materials where required, or if disputes otherwise arise with respect to the intellectual property developed with the use of a collaboration partner's samples, we may be limited in our ability to capitalize on the market potential of these inventions. In addition, we may face claims by third parties that our agreements with employees, contractors or consultants obligating them to assign intellectual property to us are ineffective, or in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we have developed or will develop and interfere with our ability to capture the commercial value of such inventions. Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property, or may lose our exclusive rights in that intellectual property. Either outcome could have an adverse impact on our business, financial position, results of operations and future growth prospects.

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Third parties may assert that our employees or consultants or we have wrongfully used or disclosed confidential information or misappropriated trade secrets, or claim ownership of what we regard as our own intellectual property.

        We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, and no such claims against us are currently pending, we may be subject to claims that we or our employees, consultants or independent contractors have used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

        Our registered or unregistered trademarks and trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential collaboration partners or customers in our markets of interest. At times, competitors may adopt trademarks and trade names similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks. Over the long term, if we are unable to establish name recognition based on our trademarks, then we may not be able to compete effectively and our business may be adversely affected.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

        Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and applications are required to be paid to the USPTO and various governmental patent agencies outside the United States in several stages over the lifetime of the patents and applications. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process and after a patent has issued. There are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

Risks Related to Government Regulation

Government restrictions on pricing and reimbursement, as well as other healthcare payor cost-containment initiatives, may negatively impact our ability to generate revenue.

        Sales of certain of our out-licensed products and our product candidates, if and when approved for marketing, has and will depend, in part, on the extent to which our products will be covered by third party payors, such as government health care programs like Medicare and Medicaid, commercial insurance and managed healthcare organizations. These third party payors play an important role in determining the extent to which new drugs, biologics and medical devices will be covered. The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental payors develop

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their coverage and reimbursement policies for drugs, biologics and medical devices. It is difficult to predict at this time what third party payors will decide with respect to the coverage and reimbursement for our product candidates. The primary trend in the U.S. healthcare industry and elsewhere has been cost containment, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products and/or biosimilars. Adoption of price controls, cost containment measures and adoption of more restrictive policies in jurisdictions with existing controls and measures, could limit our net revenue and results.

        Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for medical products, drugs and services. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for drugs. We cannot be sure that coverage will be available for any product candidate that we commercialize and, if coverage is available, the level of reimbursement. Because coverage and reimbursement determinations are made on a payor-by-payor basis, obtaining coverage and adequate reimbursement from a third party payor does not guarantee that we will obtain similar coverage or reimbursement from another third party payor. Reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval. Decreases in third party reimbursement for our product candidates or a decision by a third party payor not to cover our product candidates or provide only limited reimbursement for our product candidates could reduce physician usage of our products once approved and have a material adverse effect on our sales, results of operations and financial condition. Further, the adoption and implementation of any future governmental cost containment or other health reform initiative may result in additional downward pressure on the price that we may receive for any approved product.

        Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries has and will continue to put pressure on the pricing and usage of our product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. Other countries allow companies to fix their own prices for medical products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

        Moreover, increasing efforts by governmental and third party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates. We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs, medical devices and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the successful commercialization of new products.

We may face difficulties from changes to current regulations and future legislation.

        Existing regulatory policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in

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existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability.

        President Trump has taken actions and made statements that suggest he plans to seek repeal of all or portions of the Affordable Care Act, or the ACA. In May 2017, the House of Representatives voted to pass the American Health Care Act, or the AHCA. As proposed, the AHCA would repeal many provisions of the ACA. The Senate is expected to consider an alternative version of the AHCA and it is expected that Congress will continue to consider this or similar legislation to repeal and replace some or all elements of the ACA. There is currently uncertainty with respect to the impact any such repeal may have and any resulting changes may take time to unfold, which could have an impact on coverage and reimbursement for healthcare items and services covered by plans that were authorized by the ACA. However, we cannot predict the ultimate content, timing or effect of any such legislation or executive action or the impact of potential legislation or executive action on us.

        In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, will stay in effect through 2025 unless additional Congressional action is taken. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the U.S. government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our out-licensed products and product candidates (if and when approved) and accordingly, our financial results.

        Likewise, the annual Medicare Physician Fee Schedule update, which, until recently, was based on a target-setting formula system called the Sustainable Growth Rate, or SGR, was adjusted to reflect the comparison of actual expenditures to target expenditures. Because one of the factors for calculating the SGR was linked to the growth in the U.S. gross domestic product, or GDP, the SGR formula often resulted in a negative payment update when growth in Medicare beneficiaries' use of services exceeded GDP growth. Congress repeatedly intervened to delay the implementation of negative SGR payment updates. For example, on April 1, 2014, with the enactment of the Protecting Access to Medicare Act of 2014, Congress prevented the 24% cut that was to occur by continuing the previously implemented 0.5% payment increase through December 31, 2014 and maintaining a 0% payment update from January 1, 2015 through March 31, 2015. However, on April 14, 2015, Congress passed the Medicare Access and CHIP Reauthorization Act of 2015, which was signed into law by President Obama on April 16, 2015. This law repeals the SGR methodology from the physician payment formula, institutes a 0% update to the Medicare Physician Fee Schedule for the January 1 to July 1, 2015 period, a 0.5% payment update for July 2015 through the end of 2019, and a 0% payment update for 2020 through 2025, along with a merit-based incentive payment system beginning January 1, 2019, that will replace current incentive programs. For 2026 and subsequent years, the payment update will be either 0.75% or 0.25%, depending on which Alternate Payment Model the physician participates.

        We expect more rigorous coverage criteria in the future in the U.S. healthcare market and an additional downward pressure on the prices that we receive for approved products. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our out-licensed products and product candidates.

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        In addition, it is not currently possible to predict how, if at all, the FDA's approved process or regulation will change as a result of the Trump Administration or what impact any such changes will have on us.

Our operations involve hazardous materials and we and third parties with whom we contract must comply with environmental laws and regulations, which can be expensive and restrict how we do business.

        As a pharmaceutical company, we are subject to environmental and safety laws and regulations, including those governing the use of hazardous materials. The cost of compliance with health and safety regulations is substantial. Our business activities involve the controlled use of hazardous materials. Our R&D activities involve the controlled storage, use and disposal of hazardous materials, including the components of our product candidates and other hazardous compounds. We and manufacturers and suppliers with whom we may contract are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers' facilities pending their use and disposal. We cannot eliminate the risk of accidental contamination or injury from these materials, which could cause an interruption of our commercialization efforts, R&D efforts and business operations, environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. We cannot guarantee that that the safety procedures utilized by third party manufacturers and suppliers with whom we may contract will comply with the standards prescribed by laws and regulations or will eliminate the risk of accidental contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability could exceed our resources and European, U.S. federal and state or other applicable authorities may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. We do not currently carry biological or hazardous waste insurance coverage. In the event of an accident or environmental discharge, we may be held liable for any consequential damage and any resulting claims for damages, which may exceed our financial resources and may materially adversely affect our business, results of operations and prospects, and the value of our shares.

We are subject to healthcare laws and regulations, which may require substantial compliance efforts and could expose us to criminal sanctions, civil penalties, exclusion from government healthcare programs, contractual damages, reputational harm and diminished profits and future earnings, among other penalties.

        If we market products ourselves, healthcare providers, such as physicians and others, will play a primary role in the recommendation and prescription of our products, if approved. Our arrangements with such persons and third party payors and our general business operations will expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, market, sell and distribute our products. Restrictions under applicable U.S. federal, state and non-U.S. healthcare laws and regulations include, but are not limited to, the following:

    the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, including any kickback, bribe or rebate, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase or lease, order or recommendation of, any item, good, facility or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;

    the federal Beneficiary Inducement Statute, which prohibits giving anything of value to a government insurance beneficiary that could influence the choice of provider or reimbursable covered product;

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    federal civil and criminal false claims laws and civil monetary penalties laws, including the civil False Claims Act, which impose criminal and civil penalties, including those from civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

    the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that impose criminal and civil liability for, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or knowingly and willingly falsifying, concealing or covering up a material fact or making false statements relating to healthcare matters;

    HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, which impose certain requirements on covered entities and their business associates, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

    the federal transparency requirements under the Physician Payments Sunshine Act, enacted as part of the Patient Protection and ACA that require applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children's Health Insurance Program, with specific exceptions, to track and annually report to the Centers for Medicare & Medicaid Services, or CMMS, payments and other transfers of value provided to physicians and teaching hospitals, and certain ownership and investment interests held by physicians or their immediate family members;

    analogous state or non-U.S. laws and regulations, such as state anti-kickback and false claims laws, which may apply to items or services reimbursed by any third party payor, including commercial insurers, state marketing and/or transparency laws applicable to manufacturers that may be broader in scope than the federal requirements, state laws that require biopharmaceutical companies to comply with the biopharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may be more stringent than HIPAA, thus complicating compliance efforts; and

    rules/legislation covering more or less the same subject matter are found in numerous other countries, including in Denmark, which sometimes result in lower or higher exposures in those countries than in the United States.

        Ensuring that our business arrangements with third parties comply with applicable healthcare laws and regulations will likely be costly. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations were found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, possible exclusion from government funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could substantially disrupt our operations. If the physicians or other providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

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Our employees and collaboration partners may engage in misconduct or other improper activities, including violating applicable regulatory standards and requirements or engaging in insider trading, which could significantly harm our business.

        We are exposed to the risk of employee fraud or other misconduct and the fraud and misconduct of our collaboration partners. Misconduct by our employees or our collaboration partners could include intentional failures to:

    comply with legal requirements or the requirements of the FDA, the EMA, the CMMS and other comparable regulatory authorities;

    provide accurate information to applicable government authorities;

    comply with fraud and abuse and other healthcare laws and regulations in the United States, or similar laws in Denmark and elsewhere;

    comply with the FCPA and other applicable anti-bribery laws;

    report financial information or data accurately; or

    disclose unauthorized activities to us.

        In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing, bribery and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee or collaboration partner misconduct could also involve the improper use of, including trading on, information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a code of conduct, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may be ineffective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

Changes in Danish, U.S. or other foreign tax laws or compliance requirements, or the practical interpretation and administration thereof, could have a material adverse effect on our business, financial condition and results of operations.

        We are affected by various Danish, U.S. and foreign taxes, including direct and indirect taxes imposed on our global activities, such as corporate income, withholding, customs, excise/energy, value added, sales, environmental and other taxes. Significant judgment is required in determining our provisions for taxes and there are many transactions and calculations where the ultimate tax determination is uncertain.

        Changes in Danish or foreign direct or indirect tax laws or compliance requirements, including the practical interpretation and administration thereof, including in respect to market practices, or otherwise, could have a material adverse effect on our business, financial position, results of operations and future growth prospects.

The impact on us of the recent vote by the UK to leave the EU cannot be predicted.

        The UK is a major market for pharmaceutical products, in general, and for products that treat diabetes, in particular. On June 23, 2016, the UK voted to leave the EU in an advisory referendum, which is generally referred to as Brexit. On March 29, 2017, the UK delivered notice under Article 50 of the Lisbon Treaty of its intent to leave the EU, beginning a two year negotiation period for the UK and the

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27 remaining members of the EU to reach agreement on the terms of the exit. The UK remains a member of the EU and there will not be an immediate change in either EU or UK law as a consequence of Brexit. The ultimate impact of the "leave" vote will depend on terms that are negotiated in relation to the UK's future relationship with the EU. The precise timetable for Brexit is not clear at this stage.

        Brexit may lead to legal uncertainty and potentially divergent laws and regulations between the UK and the EU, as the UK determines which EU laws to replicate or replace. We cannot predict whether or not the UK will significantly alter its current laws and regulations in respect of the pharmaceutical industry and, if so, what impact any such alteration would have on us or our business. Moreover, we cannot predict the impact that Brexit will have on (i) the marketing of pharmaceutical products or (ii) the process to obtain regulatory approval in the United Kingdom for product candidates.

        Brexit may also result in a reduction of funding to the EMA if the UK no longer makes financial contributions to European institutions, such as the EMA. If UK funding is so reduced, it could create delays in the EMA issuing regulatory approvals for our product candidates and, accordingly, have a material adverse effect on our business, financial position, results of operations and future growth prospects.

Risks Related to this Offering

You will not be directly holding our shares.

        As a holder of the ADSs, you will not be treated as one of our shareholders and you will not have shareholder rights. Our depositary, the Bank of New York Mellon, will be the holder of the shares underlying your ADSs. As a holder of ADSs, you will have contractual ADS holder rights. The deposit agreement among us, the depositary and you, as an ADS holder, and all other persons directly and indirectly holding ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. ADS holders may only exercise voting rights with respect to the shares underlying their respective ADSs in accordance with the provisions of the deposit agreement, which provides that you may vote the shares underlying the ADSs for any particular matter to be voted on by our shareholders either by withdrawing the shares underlying the ADSs or, to the extent permitted by applicable law and as permitted by the depositary, by requesting a temporary registration as shareholder in our shares and authorizing the depositary to act as proxy. Voting instructions may be given only in respect of a number of ADSs representing an integral number of shares or other deposited securities. Our board of directors is committed to using reasonable efforts to work towards removing this restriction at the extraordinary general meeting to be convened to approve this offering in 2017. If this restriction is removed, the depositary would be able to vote the shares registered in its name that underlie the ADSs to more closely reflect the preferences of the ADS holders, thereby effectively permitting pass-through voting by ADS holders who indicate their preference to the depositary in accordance with and subject to the depositary's procedures. Even if you are able to instruct the depositary to vote the shares underlying your ADSs, we cannot guarantee you that the depositary will vote in accordance with your instructions. Please see the risk factor entitled "You may not be able to exercise your right to vote the shares underlying the ADSs."

There has been no prior market for the ADSs on a U.S. national securities exchange and an active and liquid market for our securities may fail to develop, which could harm the market price of the ADSs.

        Prior to this offering, while our shares have been traded on Nasdaq Copenhagen since November 2010, there has been no public market on a U.S. national securities exchange for the ADSs or our shares. Although we have applied to list the ADSs on The NASDAQ Global Select Market, or NASDAQ, an active trading market for the ADSs may never develop or be sustained following this offering. The offering price of the ADSs will be based on the market price for our shares on Nasdaq Copenhagen at the time of this offering. This offering price may not be indicative of the market price of the ADSs or shares after this offering. In the absence of an active trading market for the ADSs or shares, investors may not be able to

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sell their ADSs at or above the offering price or at the time that they would like to sell. In addition, although we expect the price of the ADSs in this offering to be based on the closing price of the underlying ordinary shares on Nasdaq Copenhagen at the time of this offering, there is no guarantee that such price will be free from challenge by our existing shareholders based on allegations that it does not reflect the "market price" at which we are required by our articles of association and Danish law to sell our ordinary shares. Any such shareholder challenge could be time consuming and costly and, if decided in a manner unfavorable to us, could result in liability to us and our directors, and could prevent this offering from closing.

The trading price of our equity securities may be volatile due to factors beyond our control, and purchasers of the ADSs could incur substantial losses.

        The market prices of the ADSs and shares may be volatile. The stock market in general and the market for biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their ADSs or shares at or above the price originally paid for the security. The market price for the ADSs and shares may be influenced by many factors, including, but not limited to:

    actual or anticipated fluctuations in our financial condition and operating results;

    the release of new data from the clinical trials of our product candidates;

    actual or anticipated changes in our growth rate relative to our competitors;

    competition from existing products or new products that may emerge;

    announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;

    failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public;

    issuance of new or updated research or reports by securities analysts;

    fluctuations in the valuation of companies perceived by investors to be comparable to us;

    currency fluctuations;

    share price and volume fluctuations attributable to inconsistent trading volume levels of our ADSs;

    additions or departures of key management or scientific personnel;

    disputes or other developments related to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;

    changes to coverage policies or reimbursement levels by commercial third party payors and government payors and any announcements relating to coverage policies or reimbursement levels;

    announcement or expectation of additional debt or equity financing efforts;

    issuances or sales of our shares or ADSs by us, our insiders or our other shareholders; and

    general economic and market conditions.

        These and other market and industry factors may cause the market price and demand for the ADSs to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling their shares or ADSs and may otherwise negatively affect the liquidity of the trading market for ADSs.

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We have broad discretion over the use of the net proceeds from this offering and may use them in ways with which you do not agree and in ways that may not enhance our operating results or the price of our ADSs.

        Our board of directors and management will have broad discretion over the application of the net proceeds that we receive from this offering. We may spend or invest these proceeds in ways with which our shareholders and holders of ADSs disagree or that do not yield a favorable return, if at all. We intend to use the net proceeds from this offering, together with our existing cash resources as described in "Use of Proceeds." However, our use of these proceeds may differ substantially from our current plans. Failure by our management to apply these funds effectively could harm our business and financial condition. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price of the ADSs and their trading volume could decline.

        The trading market for the ADSs and shares depends in part on the research and reports that securities or industry analysts publish about us or our business. If no or only limited securities or industry analysts cover our company, the trading price for the ADSs would be negatively impacted. If one or more of the analysts who covers us downgrades our equity securities or publishes inaccurate or unfavorable research about our business, the price of ADSs would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, or downgrades our securities, demand for ADSs could decrease, which could cause the price of the ADSs or their trading volume to decline.

We intend to retain all available funds and any future earnings and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of the ADSs.

        We have never declared or paid any cash dividends on our shares, and we intend to retain all available funds and any future earnings to fund the development and expansion of our business. Therefore, you are not likely to receive any dividends on your ADSs for the foreseeable future and the success of an investment in ADSs will depend upon any future appreciation in its value. Consequently, investors may need to sell all or part of their holdings of ADSs after price appreciation, which may never occur, as the only way to realize any future gains on their investment. There is no guarantee that the ADSs will appreciate in value or even maintain the price at which our investors have purchased them. Investors seeking cash dividends should not purchase the ADSs or shares.

        In addition, exchange rate fluctuations may affect the amount of Danish kroner that we are able to distribute, and the amount in U.S. dollars that our shareholders receive upon the payment of cash dividends or other distributions we declare and pay in Danish kroner, if any. Additionally, dividends will generally be subject to Danish withholding tax. See the section of this prospectus titled "Material Danish Income Tax Consequences" for a more detailed description of Danish taxes on dividends. These factors could harm the value of the ADSs.

        ADS investors may also not realize all of the benefits of being a shareholder in our company. For instance, the votes of ADS holders will not be represented directly on our books, but only through a vote by the depositary of the underlying shares, which vote will reflect the ADS majority's election on the vote of all such shares. Separately, we may elect to offer subscription rights to our shareholders without offering such rights to ADS holders.

Investors in this offering will experience immediate and substantial dilution in the book value of their investment.

        The initial public offering price of the ADSs is substantially higher than the pro forma net tangible book value per ADS before giving effect to this offering. Accordingly, if you invest in the ADSs in this offering, you will incur immediate substantial dilution of approximately DKK        per ADS ($        ) (based on the net tangible book value per share underlying the ADSs), based on an assumed initial public

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offering price of $            per ADS (DKK        ), and our pro forma net tangible book value as of March 31, 2017. In addition, following this offering, investors in this offering will have contributed approximately    % of the total gross consideration paid by shareholders to purchase our outstanding shares and ADSs, but will only own ADSs representing approximately    % of our shares and ADSs outstanding after this offering. Furthermore, if the underwriters exercise their option to purchase additional ADSs, if board authorizations to issue additional shares, or ADSs or outstanding warrants or convertible securities are issued and subsequently exercised, you could experience further dilution. For a further description of the dilution that you will experience immediately after this offering, see "Dilution."

Investors should be aware that the rights provided to our shareholders and holders of ADSs under Danish corporate law and our articles of association differ in certain respects from the rights that you would typically enjoy as a shareholder of a U.S. company under applicable U.S. federal and state laws.

        Under Danish corporate law, except in certain limited circumstances, which require at a minimum that a proposal for inspection has been supported by a minimum of 25% of the shareholders voting and being present at a general meeting, our shareholders may not ask for an inspection of our corporate records, while under Delaware corporate law any shareholder, irrespective of the size of such shareholder's shareholdings, may do so. Shareholders of a Danish limited liability company are also unable to initiate a derivative action, a remedy typically available to shareholders of U.S. companies, in order to enforce a right of our company, in case we fail to enforce such right ourselves, other than in certain cases of board member/management liability under limited circumstances. In addition, a majority of our shareholders may release a member of our board of directors or our executive management from any claim of liability we may have, including if such board member or manager has acted in bad faith or has breached his or her duty of loyalty. However, a shareholder may bring a derivative action on behalf of our company against, among other persons, a member of our board of directors or our executive management, provided that the circumstances of the act or omission giving rise to the claim of liability were not known to the shareholders at the time of such shareholder resolution, or if shareholders representing at least 10% of the share capital represented at the relevant general meeting has opposed such shareholder resolution. In contrast, most U.S. federal and state laws prohibit a company or its shareholders from releasing a board member from liability altogether if such board member has acted in bad faith or has breached such board member's duty of loyalty to our company. Additionally, distribution of dividends from Danish companies to foreign companies and individuals can be subject to non-refundable withholding tax, and not all receiving countries allow for deduction. See "Material Danish Income Tax Consequences" for a more detailed description of the withholding tax. Also, the rights as a creditor may not be as strong under Danish insolvency law as under U.S. law or other insolvency law, and consequently creditors may recover less in the event our company is subject to insolvency compared to a similar case including a U.S. debtor. In addition, the use of the tax asset consisting of the accumulated tax losses requires that we are able to generate positive taxable income and the use of tax losses carried forward to offset against future income is subject to certain restrictions and can be restricted further by future amendments to Danish tax law. Finally, Danish corporate law may not provide appraisal rights in the case of a business combination equivalent to those generally afforded a shareholder of a U.S. company under applicable U.S. laws. For additional information on these and other aspects of Danish corporate law and our articles of association, see the section herein entitled "Description of Share Capital." As a result of these differences between Danish corporate law and our articles of association, on the one hand, and U.S. federal and state laws, on the other hand, in certain instances, you could receive less protection as an equity holder of our company than you would as a shareholder of a U.S. company.

You may not be able to exercise your right to vote the shares underlying your ADSs.

        ADS holders may only exercise voting rights with respect to the shares underlying their respective ADSs in accordance with the provisions of the deposit agreement, which provides that a holder may vote the shares underlying any ADSs for any particular matter to be voted on by our shareholders either by

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withdrawing the shares underlying the ADSs or, to the extent permitted by applicable law and as permitted by the depositary, by requesting a temporary registration as shareholder and authorizing the depositary to act as proxy. However, you may not know about the meeting far enough in advance to withdraw those shares, and after such a withdrawal you would no longer hold ADSs, but rather you would directly hold the underlying shares. You also may not know about the meeting far enough in advance to request a temporary registration.

        Absent said withdrawal or, to the extent permitted by applicable law and as permitted by the depositary, temporary registration and proxy, Danish law prevents the depositary from differentiated voting at our general meetings unless our articles of association specifically allow for this, which is currently not the case, meaning that all votes on the shares held by the depositary, including those underlying the ADSs issued in this offering, would need to be cast either in favor of or against any proposal at our general meetings, if such shares were voted at all. The depositary will try, as far as practical, to vote the shares underlying the ADSs as instructed by the ADS holders. However, each registered holder of our ordinary shares, including the depositary, is only permitted to vote its shares in an entirety for or against any particular shareholder vote, under our charter. Our board of directors is committed to working towards removing this restriction at the extraordinary general meeting to be convened to approve this offering in 2017. If this restriction is removed, the depositary would be able to vote the shares registered in its name that underlie the ADSs to more closely reflect the preferences of the ADS holders, thereby effectively permitting pass-through voting by ADS holders who indicate their preference to the depositary in accordance with and subject to the depositary's procedures.

        In such an instance, if we ask for your instructions, the depositary, upon timely notice from us, will notify you of the upcoming vote and arrange to deliver our voting materials to you. We cannot guarantee that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares or to withdraw your shares so that you can vote them yourself. If the depositary does not receive timely voting instructions from you, it may give a proxy to a person designated by us to vote the shares underlying your ADSs. Voting instructions may be given only in respect of a number of ADSs representing an integral number of shares or other deposited securities. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise any right to vote that you may have with respect to the underlying shares, and there may be nothing you can do if the shares underlying your ADSs are not voted as you requested. In addition, the depositary is only required to notify you of any particular vote if it receives notice from us in advance of the scheduled meeting. Our articles of association permits, in the case of general meetings, notice to be delivered within a shorter time span, in which case the depositary would not be required to provide you with notice of and access to such vote.

You may be subject to limitations on the transfer of your ADSs and the withdrawal of the underlying shares.

        Your ADSs, which may be evidenced by ADRs, are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of your ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason subject to your right to cancel your ADSs and withdraw the underlying shares. Temporary delays in the cancellation of your ADSs and withdrawal of the underlying shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of shares is blocked to permit voting at a shareholders' meeting or we are paying a dividend on our shares. In addition, you may not be able to cancel your ADSs and withdraw the underlying shares when you owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental

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regulations that apply to ADSs or to the withdrawal of shares or other deposited securities. See "Description of American Depositary Shares."

Future sales, or the perception of future sales, of a substantial number of our shares or ADSs could adversely affect the price of the ADSs, and actual sales of our equity will dilute shareholders and ADS holders.

        Future sales of a substantial number of our shares or ADSs, or the perception that such sales will occur, could cause a decline in the market price of the ADSs. Following the completion of this offering, based on the number of shares outstanding as of December 31, 2016, we will have            shares outstanding (assuming no exercise of the underwriters' over-allotment option). This includes the shares underlying the ADSs offered in this offering, which may be resold in the public market immediately without restriction, unless purchased by our affiliates. A significant portion of the shares we have outstanding will be subject to the lock-up agreements described in the "Underwriting" section of this prospectus. If, after the period during which such lock-up agreements restrict sales of the ADSs and shares, these shareholders sell substantial amounts of shares or ADSs in the public market, or the market perceives that such sales may occur, the market price of the ADSs and our ability to raise capital through an issue of equity securities in the future could be adversely affected.

If we issue shares in future financings, shareholders may experience immediate dilution and, as a result, our share price may decline.

        We may from time to time issue additional shares at a discount from the trading price of our shares. As a result, our shareholders would experience immediate dilution upon the issuance of any of our shares at such discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preference shares or shares. If we issue shares or securities convertible into shares of our share capital, our ordinary shareholders would experience additional dilution and, as a result, our share price may decline.

Claims of U.S. civil liabilities may not be enforceable against us.

        We are incorporated under the laws of Denmark. Substantially all of our assets are located outside the United States. The majority of our board members and employees reside outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or to enforce against them or us in U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. securities laws.

        The United States and Denmark currently do not have a treaty providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Consequently, a final judgment for payment given by a U.S. court, whether or not predicated solely upon U.S. securities laws, would not be enforceable in Denmark.

        In order to obtain a judgment that is enforceable in Denmark, the party in whose favor a final and conclusive judgment of the U.S. court has been rendered will be required to file its claim again with a court of competent jurisdiction in Denmark. The Danish court will not be bound by the judgment by the U.S. court, but the judgment may be submitted as evidence. It is up to the Danish court to assess the judgment by the U.S. court and decide if and to what extent the judgment should be followed. Danish courts are likely to deny claims for punitive damages and may grant a reduced amount of damages compared to U.S. courts.

        Based on the lack of a treaty as described above, U.S. investors may not be able to enforce against us or members of our board of directors or our executive management, or certain experts named herein who are residents of Denmark or countries other than the United States any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws.

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As a foreign private issuer and as permitted by the listing requirements of NASDAQ, we will rely on certain home country corporate governance practices rather than the corporate governance requirements of NASDAQ.

        We qualify as a foreign private issuer and have applied to have the ADSs listed on NASDAQ. As a result, in accordance with the listing requirements of NASDAQ, we will rely on home country governance requirements and certain exemptions thereunder rather than relying on the corporate governance requirements of NASDAQ. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. In addition, our officers and directors are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, while we currently publish annual and quarterly reports on our website pursuant to the rules of Nasdaq Copenhagen and expect to file such financial reports on an annual and quarterly basis with the SEC, we will not be required to file such reports with the SEC as frequently or as promptly as U.S. public companies and will not be required to file quarterly reports on Form 10-Q or current reports on Form 8-K that a domestic company would be required to file under the Exchange Act. Accordingly, there may be less publicly available information concerning our company than there would be if we were not a foreign private issuer.

        In addition, the Listing Rules for the Nasdaq Stock Market, or the Nasdaq Listing Rules, for domestic U.S. issuers require listed companies to have, among other things, a majority of their board members be independent, and to have independent director oversight of executive compensation, nomination of board members and corporate governance matters. While we intend to comply with these requirements, we are permitted to follow home country practice in lieu of the above requirements. Danish law does not require that a majority of our board consist of independent directors or the implementation of a nominating and corporate governance committee, and our board may thus in the future not include, or include fewer, independent directors than would be required if we were subject to the Nasdaq Listing Rules, or they may decide that it is in our interest not to have a compensation committee or nominating and corporate governance committee, or have such committees governed by practices that would not comply with the Nasdaq Listing Rules. We intend to follow home country practice with regard to, among other things, quorum requirements generally applicable to general meetings of shareholders. Danish law does not have a regulatory regime for the solicitation of proxies and the solicitation of proxies is not a generally accepted business practice in Denmark, thus our practice will vary from the requirement of Nasdaq Listing Rule 5620(b). In addition, our shareholders have authorized our board of directors to issue securities, including in connection with certain events such as the acquisition of shares or assets of another company, the establishment of or amendments to equity-based compensation plans for employees, rights issues at or below market price, certain private placements, directed issues at or above market price, and issuance of convertible notes. To this extent, our practice varies from the requirements of Nasdaq Listing Rule 5635, which generally requires an issuer to obtain shareholder approval for the issuance of securities in connection with such events. For an overview of our corporate governance principles, see "Description of Share Capital." Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to these Nasdaq Listing Rule requirements.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

        As a foreign private issuer, we are not required to comply with all the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. Following the consummation of this offering, the determination of foreign private issuer status will be made annually on the last business day of our most recently completed second fiscal quarter. Accordingly, we will next make a determination with respect to our foreign private issuer status on June 30, 2018. There is a risk that we will lose our foreign private issuer status in the future.

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        We would lose our foreign private issuer status if, for example, more than 50% of our assets are located in the United States and we continue to fail to meet additional requirements necessary to maintain our foreign private issuer status. As of December 31, 2016, an immaterial amount of our assets were located in the United States, although this may change if we expand our operations in the United States. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly greater than the costs we incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive in certain respects than the forms available to a foreign private issuer. We would be required under current SEC rules to prepare our financial statements in accordance with U.S. GAAP and modify certain of our policies to comply with corporate governance practices associated with U.S. domestic issuers. Such conversion and modifications would involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers, which could also increase our costs.

U.S. holders of ADSs may suffer adverse tax consequences if we are characterized as a passive foreign investment company.

        Under the U.S. Internal Revenue Code of 1986, as amended, or Code, we will be a passive foreign investment company, or PFIC, for any taxable year in which, after the application of certain "look-through" rules with respect to subsidiaries, either (i) 75% or more of our gross income consists of "passive income," or (ii) 50% or more of the average quarterly value of our assets, including cash, consists of assets that produce, or are held for the production of, "passive income." Passive income generally includes interest, dividends, rents, certain non-active royalties and capital gains. Whether we will be a PFIC in any year depends on the composition of our income and assets, and the relative fair market value of our assets from time to time, which we expect may vary substantially over time. Based on certain estimates of our gross income and gross assets, the latter determined by reference to the value of the ADSs and shares, we believe that we will not be classified as a PFIC for the taxable year ending December 31, 2017. However, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.

        If we are a PFIC for any taxable year during which a U.S. Holder (as defined below) holds ADSs, a U.S. Holder may be subject to adverse tax consequences if a mark-to-market election or a qualified electing fund, or QEF, election has not been made with respect to its ADSs. A U.S. Holder may incur significant additional U.S. federal income taxes on income resulting from certain distributions on, or any gain from the disposition of, such ADSs, as such income generally would be allocated over the U.S. Holder's holding period for its ADSs. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC would be subject to tax as ordinary income earned in the current year, and all other amounts would be subject to tax at the highest rates of U.S. federal income taxation in effect for such years, with an interest charge then imposed on the resulting taxes in respect of such income. Furthermore, if we are a PFIC for any taxable year during which the U.S. Holder holds ADSs, dividends paid by us would not be eligible for preferential individual rates of U.S. federal income tax. In addition, U.S. Holders that own an interest in a PFIC are required to comply with certain reporting requirements.

        A U.S. Holder may in certain circumstances mitigate the adverse tax consequences of the PFIC rules by filing an election to treat the PFIC as a QEF, or, if shares of the PFIC are "marketable stock" for purposes of the PFIC rules, by making a mark-to-market election with respect to the shares of the PFIC. However, in the event that we are or become a PFIC, we do not intend to comply with the reporting requirements necessary to permit U.S. Holders to elect to treat us as a QEF. Furthermore, if a U.S. Holder were to make a mark-to-market election with respect to its ADSs, the U.S. Holder would be required to include annually in its U.S. federal taxable income (taxable at ordinary income rates) an amount reflecting

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any year end increase in the value of its ADSs. For further discussion of the U.S. federal income tax consequences if we were to be classified as a PFIC, see "Material U.S. Federal Income Tax Considerations."

As a result of becoming a public company, we will become subject to additional regulatory compliance requirements, including Section 404 of the Sarbanes-Oxley Act, and if we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

        As a U.S. public company listed on NASDAQ, we will incur legal, accounting, and other expenses that we did not previously incur. We will be subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the NASDAQ listing requirements and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on our systems and resources, particularly after we are no longer an "emerging growth company" and/or a foreign private issuer. The Exchange Act would require that, as a public company, we file annual, semi-annual and current reports with respect to our business, financial condition and result of operations. However, as a foreign private issuer, we are not required to file quarterly and current reports with respect to our business and results of operations. We currently make annual, semiannual and quarterly reporting with respect to our listing on Nasdaq Copenhagen. Following the global offering, we intend to submit, on a quarterly basis, interim financial data to the Securities and Exchange Commission, or SEC, under cover of the SEC's Form 6-K.

        Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, our management will be required to assess and attest to the effectiveness of our internal control over financial reporting in connection with issuing our consolidated financial statements as of and for the year ending December 31, 2018. Section 404 also requires an attestation report on the effectiveness of internal control over financial reporting be provided by our independent registered public accounting firm beginning with our annual report following the date on which we are no longer an "emerging growth company", which may be up to five fiscal years following the date of this offering.

        The cost of complying with Section 404 will significantly increase and management's attention may be diverted from other business concerns, which could adversely affect our results of operations. We may need to hire more employees in the future or engage outside consultants to comply with these requirements, which will further increase expenses. If we fail to comply with the requirements of Section 404 in the required timeframe, we may be subject to sanctions or investigations by regulatory authorities, including the SEC and NASDAQ. Furthermore, if we are unable to attest to the effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, and the market price of our shares and ADSs could decline. Failure to implement or maintain effective internal control over financial reporting could also restrict our future access to the capital markets and subject each of us, our directors and our officers to both significant monetary and criminal liability. In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expense and a diversion of management's time and attention from revenue generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their

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application and practice, regulatory authorities may initiate legal proceedings against us and our business, financial position, results of operations and future growth prospects may be adversely affected.

We have identified material weaknesses in our internal control over financial reporting. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner or prevent fraud, which may adversely affect our business, investor confidence in our company and the market price of our shares and ADSs.

        In connection with our financial statement preparation process for the years ended December 31, 2016 and 2015, we have identified material weaknesses in the design and operating effectiveness of our internal controls over financial reporting, including lack of sufficient competencies related to IFRS and SEC reporting knowledge for the purposes of timely and reliable financial reporting. Under the standards established by the U.S. Public Company Accounting Oversight Board, or PCAOB, a material weakness is a deficiency, or a combination of deficiencies, that creates a reasonable possibility that a material misstatement of a company's annual financial statements will not be prevented or detected on a timely basis. The material weaknesses identified by us relate to our existing processes to assess risk and to design and implement effective control activities over financial reporting. In particular, we do not have formalized risk assessment, oversight and compliance processes or formalized control descriptions for all of our key controls. Where control descriptions do exist, they do not necessarily include all relevant information to enable the operating effectiveness of such controls. It is not clear whether adequate controls are performed in all areas. Where control activities are dependent on certain information, which is referred to as our Information Used in a Control, or IUC, we currently do not perform or document controls to assess the completeness and accuracy of such information. We do not currently monitor control activities and identified control deficiencies; thus, we are unable to evaluate whether other deficiencies, individually or in combination, result in a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Further, restatements resulting from the correction of certain misstatements in our annual financial statements included in this prospectus have been identified. These restatements occurred due to the lack of sufficient overall review of the financial statements and lack of oversight of the application and implementation of accounting policies and accounting standards by the Company.

        We have initiated steps to remediate the material weaknesses and hired a Chief Accountant to further develop and implement formal policies, processes, internal controls and documentation relating to our financial reporting. We expect this project to be completed by the end of 2017, although the project may take longer than we currently expect and we may also discover future deficiencies.

        We may also discover future deficiencies or material weaknesses in our internal controls over financial reporting, including those identified through testing conducted by us pursuant to Section 404(a) of the Sarbanes-Oxley Act or subsequent testing by our independent registered public accounting firm when required pursuant to the Sarbanes-Oxley Act. Such deficiencies may be deemed to be significant deficiencies or material weaknesses and may require changes to our consolidated financial statements or identify other areas for further attention or improvement. Even if we are able to report our financial statements accurately and in a timely manner, if we do not make all necessary improvements to address any outstanding material weaknesses, continued disclosure of such significant deficiencies and material weaknesses may be required in future filings with the SEC, which may adversely affect our business, investor confidence in our company and the market price of our shares and ADSs.

Holders of the ADSs will not be able to exercise the pre-emptive subscription rights related to the shares that they represent, and may suffer dilution of their equity holding in the event of future issuances of our shares.

        Under the Danish Companies Act, our shareholders benefit from a pre-emptive subscription right on the issuance of shares for cash consideration only and not in the event of issuance of shares against non-cash contribution or debt conversion. Shareholders' pre-emptive subscription rights, in the event of

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issuances of shares against cash payment, may be disapplied by a resolution of the shareholders at a general meeting of our shareholders and/or the shares may be issued on the basis of an authorization granted to the board of directors pursuant to which the board may disapply the shareholders' pre-emptive subscription rights. We have asked our shareholders to waive their pre-emptive subscription rights at the upcoming general meeting to be held on July 31, 2017 with respect to the proposed authorization to our board of directors to effect the capital increase necessary to effectuate the offering. Such shares may be issued at or above market value or below market value in the case of rights issues or pursuant to a resolution of the shareholders. The absence of pre-emptive rights for existing equity holders may cause dilution to such holders.

        Furthermore, the ADS holders would not be entitled, even if such rights accrued to our shareholders in any given instance, to receive such pre-emptive subscription rights related to the shares that they represent. Rather, the depositary is required to endeavor to sell any such subscription rights that may accrue to the shares underlying the ADSs and to remit the net proceeds therefrom to the ADS holders pro rata. In addition, if the depositary is unable to sell rights, the depositary will allow the rights to lapse, in which case you will receive no value for these rights. Further, if we offer holders of our shares the option to receive dividends in either cash or shares, under the deposit agreement, ADS holders will not be permitted to elect to receive dividends in shares or cash, but will receive whichever option we provide as a default to shareholders who fail to make such an election.

We are a Danish company with limited liability. The rights of our shareholders may be different from the rights of shareholders in companies governed by the laws of U.S. jurisdictions.

        We are, and will upon the consummation of this offering be, a Danish company with limited liability. Our corporate affairs are governed by our Articles of Association and by the laws governing companies incorporated in Denmark. The rights of shareholders and the responsibilities of members of our board of directors may be different from the rights and obligations of shareholders and boards of directors in companies governed by the laws of U.S. jurisdictions. In the performance of its duties, our board is required by Danish law to consider the interests of our company, its shareholders, its employees and other stakeholders, in all cases with due observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, the interests of our shareholders. See "Description of Share Capital—Articles of Association and Danish Corporate Law."

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "aim," "anticipate," "assume," "believe," "contemplate," "continue," "could," "due," "estimate," "expect," "goal," "intend," "may," "objective," "plan," "predict," "potential," "positioned," "seek," "should," "target," "will," "would," and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.

        These forward-looking statements include, but are not limited to, statements about:

    our expectations regarding the sales of Adlyxin and Soliqua100/33 in the United States, Lyxumia outside of the United States and Suliqua in the European Union;

    our receipt of future milestone payments from our collaboration partners, and the expected timing of such payments;

    our expectations regarding the potential market size and the size of the patient populations for our product candidates, if approved for commercial use;

    our expectations regarding the potential advantages of our product candidates over existing therapies;

    our potential to enter into new collaborations;

    our expectations with regard to our ability to develop additional product candidates using peptides and file Investigational New Drug Applications, or INDs, for such product candidates;

    our expectations with regard to the willingness and ability of our current and future collaboration partners to pursue the development of our product candidates;

    our development plans with respect to our product candidates;

    our ability to develop, acquire and advance product candidates into, and successfully complete, clinical trials;

    the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs;

    the timing or likelihood of regulatory filings and approvals for our product candidates;

    the commercialization and market acceptance of our product candidates;

    our marketing and manufacturing capabilities;

    the pricing of and reimbursement for our approved product candidates;

    the implementation of our business model and strategic plans for our business, product candidates and technology;

    our and our collaboration partners' ability to operate our businesses without infringing the intellectual property rights and proprietary technology of third parties;

    the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates;

    our analysis of our actual or potential patent infringement claims and the rights of our collaboration partners with respect to such claims;

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    estimates of our expenses, future revenue, capital requirements, our needs for additional financing and our ability to obtain additional capital;

    regulatory development in the United States, Europe and other jurisdictions;

    our exposure to additional scrutiny as a U.S. public company;

    our ability to effectively manage our anticipated growth;

    our ability to attract and retain qualified employees and key personnel;

    our expectations regarding the time during which we will be an emerging growth company under the JOBS Act;

    our use of proceeds from this offering;

    our financial performance; and

    developments and projections relating to our competitors and our industry, including competing therapies.

        These forward-looking statements are based on our current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management's beliefs and assumptions, and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this prospectus may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under "Risk Factors" and elsewhere in this prospectus. Potential investors are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date of this prospectus. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC, after the date of this prospectus. See "Where You Can Find More Information."

        In this prospectus, disclosures of aggregate milestone payments remaining to be paid with respect to out-licensed products are limited to those arising from programs that have been initiated.

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MARKET, INDUSTRY AND OTHER DATA

        This prospectus contains estimates, projections and other information concerning our industry, our business, and the markets for our product and product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from our own internal estimates and research as well as from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

        In addition, assumptions and estimates of our and our industry's future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors." These and other factors could cause our future performance to differ materially from our assumptions and estimates. See "Special Note Regarding Forward-Looking Statements."

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USE OF PROCEEDS

        We estimate that the net proceeds from the sale of                    ADSs in this offering will be approximately $            (DKK         ), after deducting the underwriting commission and estimated offering expenses payable by us, based on an assumed initial public offering price of $            per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen on                        , 2017 of DKK                , at the U.S. dollar/DKK exchange rate of                as of                 , 2017 and an ADS-to-share ratio of            . If the underwriters exercise their option to purchase additional ADSs in full, we estimate that the net proceeds to us from this offering will be approximately $            , after deducting the underwriting commission and estimated offering expenses payable by us. Each $            increase (decrease) in the assumed initial public offering price of $            per ADS would increase (decrease) the net proceeds to us from this offering, after deducting the underwriting commission and estimated offering expenses payable by us, by $            , assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same. We may also increase or decrease the number of ADSs we are offering. An increase (decrease) of                in the number of ADSs we are offering would increase (decrease) the net proceeds to us from this offering, after deducting the underwriting commission and estimated offering expenses payable by us, by $            , assuming the assumed initial public offering price stays the same.

        We intend to use the net proceeds from this offering, together with our existing cash resources and future revenue from our out-licensed portfolio through 2020, for the following purposes:

    approximately $         million to fund clinical trials and registration of glepaglutide as a treatment for SBS;

    approximately $         million to fund clinical trials and registration of dasiglucagon as single-dose rescue treatment for acute, severe hypoglycemia or "insulin shock;"

    approximately $         million to fund clinical trials of dasiglucagon as a multiple-dose version for use in a dual-hormone artificial pancreas system for improved hypoglycemia control and better diabetes management;

    approximately $         million to fund clinical trials of dasiglucagon as a multiple-dose version for use in a single-hormone pump for the treatment of congenital hyperinsulinism;

    approximately $         million to start building commercial and supply chain competencies; and

    the remainder to advance in-house, as well as in-licensed, research projects into preclinical and clinical development, to fund working capital, and for general corporate purposes which may include funding for new research and development activities, the hiring of additional personnel, capital expenditures and the costs of operating as a public company.

        Our expected use of the net proceeds from this offering represents our current intentions based upon our present plans and business conditions. As of the date of this prospectus, we cannot predict with certainty all of the particular of the net proceeds of this offering or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual use of net proceeds will vary based on numerous factors, including our ability to obtain additional financing, the relative success and cost of our research, preclinical and clinical development programs, and whether we enter into collaborations with third parties in the future. As a result, management will have broad discretion in the application of the net proceeds, and investors will be relying on our judgment regarding the application of the net proceeds of this offering. See "Risk Factors—Risks Related to this Offering—We have broad discretion over the use of the net proceeds from this offering and may use them in ways with which you do not agree and in ways that may not enhance our operating results or the price of our ADSs."

        Pending our application of the net proceeds from this offering as described above, we plan to invest such proceeds in short- and intermediate-term interest-bearing obligations and certificates of deposit.

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DIVIDEND POLICY

        We have never declared or paid any cash dividends on our shares and we do not anticipate paying any cash dividends on our shares in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future determination related to our dividend policy and the declaration of any dividends will be made at the discretion of our board of directors and will depend on a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

        To understand how any future determination by us regarding the payment of dividends would affect you as a holder of ADSs, please see the section of this prospectus entitled "Description of American Depositary Shares—Dividends and Other Distributions."

Legal and Regulatory Requirements

        In accordance with the Danish Companies Act, or DCA, dividends, if any, are declared with respect to a financial year at the annual general meeting of shareholders in the following year, where the statutory annual report (which includes the audited financial statements) for that financial year is approved. Further, our shareholders may resolve at a general meeting to distribute interim dividends and our board of directors may, pursuant to an authorization that will be granted to it by our shareholders prior to completion of this offering, resolve to distribute interim dividends. Any resolution to distribute interim dividends within six months of the date of the statement of financial position as set out in our latest adopted annual report must be accompanied by the statement of financial position from our latest annual report or an interim statement of financial position which must be reviewed by our auditor. If the decision to distribute interim dividends is passed more than six months after the date of the statement of financial position as set out in our latest adopted annual report, an interim statement of financial position must be prepared and reviewed by our auditor. The statement of financial position or the interim statement of financial position, as applicable, must show that sufficient funds are available for distribution. Dividends may not exceed the amount recommended by the board of directors for approval by the general meeting of shareholders. Moreover, dividends and interim dividends may only be made out of distributable reserves and may not exceed what is considered sound and adequate with regard to our financial condition or be to the detriment of our creditors and such other factors as the board of directors may deem relevant.

        In accordance with the DCA, share buybacks, if any, may only be carried out by the board of directors using funds that could have been distributed as dividends at the latest annual general meeting of shareholders. Any share buyback must be conducted in accordance with an authorization obtained at a general meeting of our shareholders. The authorization must be granted for a defined period of time not exceeding five years. In addition, the authorization must specify the maximum permitted value of treasury shares as well as the minimum and maximum amount that we may pay as consideration for such shares. A decision by our board of directors to engage in share buybacks, if any, will be made in accordance with the factors applicable to dividend payments set forth above.

        At our annual general meeting of shareholders held on April 5, 2017, our board of directors was authorized, until our next annual general meeting, to purchase up to 10% of our shares at a price that deviates no more than 10% from the quoted price by Nasdaq Copenhagen. Prior to our board of directors' approval of the offer price and the issuance of ADSs being offered by this prospectus, it is expected that our shareholders will, at an extraordinary general meeting to be held on July 31, 2017, expand this authorization to our board of directors to also cover the acquisition of ADSs, which can then be surrendered to The Bank of New York Mellon, as our depositary, enabling us to take delivery of the underlying shares represented by such ADSs and subsequently cancel the shares.

        See "Material Danish Income Tax Considerations" for a description of Danish withholding taxes and certain other Danish considerations relevant to the purchase or holding of shares and ADSs and "Material U.S. Federal Income Tax Considerations" for a description of U.S. federal income tax considerations relevant to the purchase or holding of shares and ADSs.

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CAPITALIZATION

        The following table sets forth our capitalization and cash and cash equivalents as of March 31, 2017 on an actual basis; and on a pro forma basis to give effect to the issuance of                        ADSs, representing                        shares, in this offering at an assumed initial public offering price of $            per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen on                        , 2017 of DKK                        , at the U.S. dollar/DKK exchange rate of                        as of                         , 2017 and an ADS-to-share ratio of                        , after deducting the underwriting commission and estimated offering expenses payable by us (excluding the potential exercise by the underwriters of their over-allotment option).

        Actual data as of March 31, 2017 in the table below is derived from our unaudited condensed consolidated interim financial statements. The pro forma data included in the table below is unaudited. You should read this information together with our unaudited condensed consolidated interim financial statements appearing elsewhere in this prospectus and the information set forth under the headings "Selected Consolidated Financial Data," "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

 
  As of March 31, 2017  
(in millions)
  Actual   Pro forma(2)  
 
  $(1)   DKK   $(1)   DKK  

Cash and cash equivalents

    59.0     410.3              

Restricted cash

    1.0     6.7              

Total Cash, Cash Equivalents and Restricted Cash

    59.9     417.0              

Royalty bond

    23.2     161.5              

Total Debt

    31.8     221.5              

Share capital

    3.8     26.2              

Share premium

    207.2     1,442.1              

Retained (losses)

    (174.6 )   (1,215.5 )            

Total Equity

    36.3     252.7              

Total Capitalization

    68.1     474.2              

(1)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

(2)
A $            increase (decrease) in the assumed initial public offering price of $            per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen on                , 2017 of DKK                , at the U.S. dollar/DKK exchange rate of                as of and an ADS-to-share ratio of                , would increase (decrease) the amount of cash and cash equivalents and share equity as of March 31, 2017 after this offering by approximately DKK                 ($            ), the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the underwriting commission and estimated offering expenses payable by us. We may also increase or decrease the number of ADSs we are offering. An increase (decrease) of                in the number of ADSs we are offering would increase (decrease) the amount of cash and cash equivalents and share equity as of March 31, 2017 after this offering by approximately DKK                ($            ), assuming the assumed initial public offering price per ADS remains the same, after deducting the underwriting commission and estimated offering expenses payable by us. The pro forma information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing.

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DILUTION

        If you invest in the ADSs in this offering, your interest will be immediately diluted to the extent of the difference between the initial public offering price per ADS in this offering and the net tangible book value per ADS after this offering. Dilution results from the fact that the initial public offering price per ADS is substantially in excess of the net tangible book value per ADS. As of March 31, 2017, we had a historical net tangible book value per ADS of $            , or DKK                        per share ($             ). Our net tangible book value per share represents total consolidated tangible assets less total consolidated liabilities, all divided by the number of shares outstanding as of March 31, 2017.

        After giving effect to the sale of ADSs in this offering at an assumed initial public offering price of $            per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen on                        , 2017 of DKK                        , at the U.S. dollar/DKK exchange rate of                        as of                        , 2017 and an ADS-to-share ratio of                         , and after deducting the underwriting commission and estimated offering expenses, our pro forma net tangible book value at March 31, 2017 would have been $            per share, or $            per ADS. This represents an immediate increase in pro forma net tangible book value of $            per share to existing shareholders and an immediate dilution of $            per ADS to new investors. The following table illustrates this dilution per ADS:

Assumed initial public offering price per ADS

        $    

Historical net tangible book value per ADS as of March 31, 2017(1)

             

Increase in pro forma net tangible book value per ADS attributable to new investors          

             

Pro forma net tangible book value per ADS after this offering

             

Dilution per ADS to new investors participating in this offering

        $    

(1)
Based on the historic net tangible book value per share as of such date.

        A $            increase (decrease) in the assumed initial public offering price of $            per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen on            , 2017 of DKK            , at the U.S. dollar/DKK exchange rate of            as of            , 2017 and an ADS-to-share ratio of            , would increase (decrease) our pro forma net tangible book value as of March 31, 2017, after this offering by approximately DKK            per share ($            ), or $            per ADS, and would increase (decrease) dilution to investors in this offering by $            per ADS assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the underwriting commission and estimated offering expenses payable by us. We may also increase or decrease the number of ADSs we are offering. An increase (decrease) of            in the number of ADSs we are offering would increase (decrease) our pro forma net tangible book value as of March 31, 2017 after this offering by approximately DKK             per share ($            ), or approximately $            per ADS, and would decrease (increase) dilution to investors in this offering by approximately $            per ADS, assuming the assumed initial public offering price per ADS remains the same, after deducting the underwriting commission and estimated offering expenses payable by us. The pro forma information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. If the underwriters fully exercise their option to purchase additional ADSs, pro forma net tangible book value after this offering would increase to approximately $            per ADS, and there would be an immediate dilution of approximately $            per ADS to new investors.

        We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that we raise

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additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our equity holders.

        The following table shows, as of March 31, 2017, on a pro forma basis, the number of ADSs purchased from us, the total consideration paid to us and the average price paid per share by existing shareholders and by new investors purchasing ADSs in this offering at an assumed initial public offering price of $            per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen on            , 2017 of DKK            , at the U.S. dollar/DKK exchange rate of            as of            , 2017 and an ADS-to-share ratio of            , before deducting the underwriting commission and estimated offering expenses payable by us (in thousands, except share and per share amounts and percentages):

 
  Shares or ADSs(1)
Purchased
  Total
Consideration
   
   
 
 
  Average
Price Per
Share
  Average
Price Per
ADS
 
 
  Number   Percent   Amount   Percent  

Existing shareholders

            % $         % $     $    

New Investors

            % $         % $     $    

Total

            % $         % $     $    

(1)
Each ADS represents one ordinary share.

        The number of shares and ADSs outstanding after this offering is based on the number of shares outstanding as of June 30, 2017, and excludes up to 2,115,668 shares that may be issued upon the exercise of outstanding warrants, and assumes no exercise of the underwriters' option to purchase up to            additional ADSs.

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EXCHANGE RATE INFORMATION

        Our business is primarily conducted in Denmark, and we prepare our consolidated financial statements in Danish kroner. For your convenience, we have presented select financial information in U.S. dollars in the sections in this prospectus entitled "Summary Consolidated Financial Data," "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Results of Operations" and in certain other sections of this prospectus. For the convenience of the reader, this prospectus also includes other translations from DKK to U.S. dollars and U.S. dollars to DKK. Unless otherwise indicated, translations from DKK to U.S. dollars and from U.S. dollars to DKK in this prospectus were made at the rate of DKK 6.96 per $1.00, the rounded official exchange rate quoted as of March 31, 2017, by Danmarks Nationalbank. Such U.S. dollar amounts are not necessarily indicative of the amounts of U.S. dollars that could actually have been purchased upon exchange of DKK at the dates indicated. On July 5, 2017, the exchange rate was DKK 6.5645 per $1.00.

        The following table presents information on the exchange rates between the DKK and the U.S. dollar for the periods indicated, as published by Danmarks Nationalbank. The rates set forth below are provided solely for your convenience and may differ from the actual rates used in the preparation of our consolidated financial statements and other financial data included in this prospectus.

 
  Period-end   Average for
Period
  Low   High  
 
  (DKK per U.S. dollar)
 

Year Ended December 31,

                         

2015

    6.8300     6.7269     6.1807     7.0806  

2016

    7.0528     6.7327     6.5220     7.1732  

Month Ended:

                         

January 31, 2017

    6.9152     7.0057     6.9152     7.1585  

February 28, 2017

    7.0144     6.9862     6.8818     7.0705  

March 31, 2017

    6.9572     6.9598     6.8330     7.0702  

April 30, 2017

    6.8054     6.9335     6.8054     7.0300  

May 31, 2017

    6.6302     6.7329     6.6203     6.8509  

June 30, 2017

    6.5165     6.6240     6.1560     6.6747  

July 31, 2017 (through July 5, 2017)

    6.5645     6.5520     6.5411     6.5645  

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MARKET INFORMATION

        Our ordinary shares have been trading on Nasdaq Copenhagen under the symbol "ZEAL" since November 23, 2010. Prior to that date, there was no public trading market for our ADSs or our ordinary shares. Our global offering in November 2010 was priced at DKK 86 (or $13.14) per ordinary share on November 23, 2010. The following table set forth the reported high and low sale prices per ordinary share in DKK for the periods indicated.

 
  Per Share
Period
  High   Low

Annual

       

2015

  DKK 168.50   DKK 80.00

2016

  DKK 154.50   DKK 87.00

Quarterly

 
 
 
 

First Quarter 2016

  DKK 154.50   DKK 92.50

Second Quarter 2016

  DKK 140.00   DKK 107.50

Third Quarter 2016

  DKK 131.00   DKK 98.50

Fourth Quarter 2016

  DKK 126.50   DKK 87.00

Monthly

 
 
 
 

January 31, 2017

  DKK 124.00   DKK 106.50

February 28, 2017

  DKK 122.00   DKK 114.50

March 31, 2017

  DKK 117.50   DKK 105.00

April 30, 2017

  DKK 128.00   DKK 117.00

May 31, 2017

  DKK 127.00   DKK 115.00

June 30, 2017

  DKK 130.50   DKK 118.50

July 31, 2017 (through July 5, 2017)

  DKK 140.00   DKK 137.50

        On July 5, 2017, the last reported sale price of the ordinary shares on Nasdaq Copenhagen was DKK 137.50 per share.

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SELECTED CONSOLIDATED FINANCIAL DATA

        The following tables present selected consolidated financial data of our business. We derived the selected consolidated income statement data for the years ended December 31, 2016 and 2015 and the selected consolidated statement of financial position data as of December 31, 2016 and 2015 from our audited consolidated financial statements, which have been restated as discussed in Note 1 of such consolidated financial statements, included elsewhere in this prospectus. We derived the summary consolidated income statement data for the three months ended March 31, 2017 and 2016 and the summary consolidated statement of financial position data as of March 31, 2017 from our unaudited condensed consolidated interim financial statements, which have been restated as discussed in Note 1 of such unaudited condensed consolidated interim financial statements, included elsewhere in this prospectus. We maintain our books and records in DKK, and prepare our audited consolidated financial statements in accordance with IFRS as issued by the IASB. You should read this data together with our consolidated financial statements and related notes appearing elsewhere in this prospectus and the information under the captions "Capitalization" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our historical results are not necessarily indicative of our future results.


Consolidated Income Statements Data

 
  Year Ended
December 31,
  Three Months Ended
March 31,
 
(in millions, except for share data)
  2016   2015(1)   2017   2017   2016(1)  
 
  $(2)   DKK   DKK   $(2)   DKK   DKK  

Revenue

    33.7     234.8     187.7     11.1     77.6     6.7  

Royalty expenses

    (4.5 )   (31.5 )   (22.3 )   (1.5 )   (10.5 )   (0.9 )

Research and development expenses

    (38.5 )   (268.2 )   (217.7 )   (8.7 )   (60.7 )   (63.7 )

Administrative expenses

    (7.5 )   (52.5 )   (41.8 )   (1.4 )   (9.9 )   (7.5 )

Other operating income

    0.2     1.7     12.8         0.1     0.9  

Operating loss

    (16.6 )   (115.7 )   (81.3 )   (0.5 )   (3.3 )   64.5  

Financial income

    0.1     0.6     3.9     0.1     0.8     0.8  

Financial expenses

    (6.4 )   (44.4 )   (42.4 )   (3.6 )   (25.2 )   (15.2 )

Loss before tax

    (22.9 )   (159.4 )   (119.8 )   (4.0 )   (27.7 )   (78.9 )

Income tax benefit

    0.8     5.5     5.9     0.2     1.4     1.1  

Net loss for the period

    (22.1 )   (153.9 )   (114.0 )   (3.8 )   (26.3 )   (77.8 )

Loss per share

                                     

Basic loss per share

    (0.9 )   (6.33 )   (4.94 )   (0.15 )   (1.03 )   (3.27 )

Diluted loss per share

    (0.9 )   (6.33 )   (4.94 )   (0.15 )   (1.03 )   (3.27 )

(1)
Our financial statements for the year ended December 31, 2015 and for the three months ended March 31, 2016 have been restated for the correction of certain misstatements. See Note 1 to our consolidated financial statements for the year ended December 31, 2015 and Note 1 to our unaudited condensed consolidated interim financial statements.

(2)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

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Consolidated Statement of Financial Position Data

 
  As of
March 31,
  As of
December 31,
 
 
  2017   2016  
(in millions)
  $(1)   DKK   DKK  

Cash and cash equivalents

    59.0     410.3     323.3  

Restricted cash

    1.0     6.7     318.7  

Total assets

    68.1     474.2     694.6  

Share premium

    207.2     1,442.1     1,441.3  

Retained (losses)

    (174.6 )   (1,215.5 )   (1,189.2 )

Total equity

    36.3     252.7     278.2  

Non-current liabilities

    18.2     126.5     328.9  

Current liabilities

    13.6     95.0     87.6  

Total equity and liabilities

    68.1     474.2     694.6  

(1)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

        You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this prospectus. The following discussion is based on our financial information prepared in accordance with IFRS, as issued by the IASB, which might differ in material respects from accounting principles generally accepted in other jurisdictions, including accounting principles generally accepted in the United States. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. All currency translations are provided solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

Overview

        We are a biotechnology company focused on the discovery, design and development of innovative peptide-based medicines. Our portfolio includes two approved products for the treatment of type 2 diabetes: (i) lixisenatide, which has been approved by the U.S. Food and Drug Administration, or FDA, and is marketed in the United States under the brand name Adlyxin and which has been approved by the European Medicines Agency, or EMA, and by other regulatory authorities outside the United States where it is marketed under the brand name Lyxumia, and (ii) a combination of lixisenatide with Lantus, the brand name of insulin glargine developed by Sanofi S.A., or Sanofi, which has been approved by the FDA and is marketed in the United States under the brand name Soliqua100/33, and has been approved by the EMA and launched in the Netherlands under the brand name Suliqua. Suliqua is expected to be launched in certain other European countries beginning in the second half of 2017.

        With the FDA and EMA's approvals of Soliqua100/33 / Suliqua on November 21, 2016 and January 17, 2017, respectively, and the FDA's approval of Adlyxin on July 27, 2016, we expect our approved portfolio of type 2 diabetes drugs to provide the basis for our near-term revenue growth. Lyxumia had annual global sales of €32.7 million in 2016 and global sales of €6.9 million for the three months ended March 31, 2017.

        In addition to these currently approved and marketed products, we also have a pipeline of other product candidates in various stages of pre-clinical and clinical development targeting gastrointestinal, metabolic and other specialty disease areas with significant unmet medical needs. In-house inventions are the basis of our portfolio, demonstrating our ability to discover and develop innovative peptide-based product candidates with favorable therapeutic profiles.

        We currently focus on gastrointestinal, metabolic and other specialty diseases where we believe that the present standard of care is inadequate and where we believe that we have the resources to advance our peptide-based product candidates into the later stages of clinical development, including registration and, potentially, commercialization, while opportunistically considering partnership relationships that may arise. In addition, we are looking to focus our efforts on drug candidates that may qualify for orphan / rare disease status. Our research and development, or R&D, organization is structured to enable dynamic collaboration across various functions and project teams at each stage of discovery and development, allowing us to advance promising opportunities quickly and take advantage of our extensive knowledge of peptide design and product development.

        We are a company of approximately 118 full-time equivalent employees as of March 31, 2017, based entirely in Denmark. We are comprised of a Danish incorporated parent company, Zealand Pharma A/S, and four wholly-owned subsidiaries, including a Danish limited partnership subsidiary incorporated in Denmark, ZP SPV 1 K/S.

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        We currently derive revenue primarily from milestone income and royalty income based on net sales by Sanofi of Lyxumia and since January 2017, Adlyxin and Soliqua100/33. We expect revenue to increase in the future as a result of sales of Soliqua100/33 and Adlyxin in the United States and of Suliqua in the EU. Our future revenue will be further dependent on the potential marketing and sale of our product candidates and milestone and other payments from our license partners triggered by development and regulatory events. However, the successful development of our product candidates is highly uncertain. We believe that significant investment in product development is necessary to be competitive and we plan to continue these investments in order to be in a position to realize the potential of our product candidates. We cannot reasonably estimate or know the nature, timing and projected costs of the efforts that will be necessary to develop or commercialize our product candidates, or the period, if any, in which material net cash flows may commence from any of our product candidates in development. This uncertainty is due to the risks and uncertainties associated with developing drugs, including the uncertainties related to:

    the scope, rate of progress and expense of our clinical trials and other R&D activities;

    our ability to obtain adequate supplies for our product candidates required for later stage clinical trials, including from third party manufacturers;

    our ability to obtain and retain collaboration partners for our product candidates;

    the potential benefits of our product candidates over other products;

    our ability to market, commercialize and achieve market acceptance of any of our internal product candidates or product candidates we may develop in the future;

    future clinical trial results;

    the terms and timing of regulatory approvals; and

    the expense of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.

        A change in the outcome of any of these variables with respect to the development of a product candidate could result in a significant change in the costs and timing associated with the development of that product candidate.

        We expect our administrative and R&D expenses to increase in the future as we continue to develop our product candidates, which we expect will result in a higher level of activity, and continue to build and strengthen our team. The magnitude of any increase in our R&D spending will depend on factors such as the results of our ongoing preclinical studies and clinical trials, the size, structure and duration of any follow-on clinical programs that we may initiate, and the cost associated with producing our product candidates on a large-scale basis for later-stage clinical trials. Furthermore, if the FDA, the EMA or other comparable regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of the clinical development of our product candidates, or if we experience significant delays in the enrollment of patients in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

        Our total annual R&D spending was DKK 268.2 million ($38.5 million) in 2016 and DKK 217.7 million in 2015. During 2015 and 2016, with respect to our internal pipeline, we conducted one Phase 2 clinical trial relating to Danegaptide (a former product candidate we are no longer advancing), one Phase 2 and two Phase 1 clinical trials relating to dasiglucagon and one Phase 2 clinical trial relating to Glepaglutide, which is still ongoing. We expect to incur increasing costs for clinical trials as our internal product candidates advance in clinical development. We expect to continue to invest in our pipeline as well as in earlier development stage research projects.

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Financial Operations Overview

        In 2016, we generated revenue of DKK 234.8 million ($33.7 million) and recognized operating losses of DKK 115.7 million ($16.6 million) and net losses of DKK 153.9 million ($22.1 million), as compared to revenue of DKK 187.7 million, operating losses of DKK 81.3 million and net losses of DKK 114.0 million in 2015.

Revenue

        Our revenue is primarily comprised of license payments, milestone payments and royalty income. License payments are recognized upon transfer of the associated licensing rights at the point at which risks and rewards have transferred. Milestone payments are related to the collaborative research agreements with commercial partners and are recognized in accordance with the agreements. Royalty income from licenses is based on third-party sales of licensed products and is recognized in accordance with contract terms in the period that the sales occur.

        Our revenue has varied and is expected to continue to vary substantially from quarter to quarter and year to year, depending upon the structure and timing of milestone events and related payments, market approval, market acceptance and sales of Adlyxin / Lyxumia and Soliqua100/33 / Suliqua, the development and marketing strategies of collaboration partners and licensees from whom we may be entitled to receive royalties and other payments and competing products and market developments.

        We have entered into collaboration and licensing partnerships and licensing agreements with various pharmaceutical companies, pursuant to which we have been, and are expected to be, entitled to milestone payments upon achieving pre-determined development and regulatory events and to royalty payments and sales-based milestones after the commercialization of our product candidates. To date, the majority of the revenue we have received has been comprised of payments received upon entering into collaboration and licensing arrangements, payments upon extending such arrangements to cover additional product candidates and payments received upon the product candidates meeting certain regulatory and development milestones. We have also received research funding recognized as other income from our collaboration partner BI and from public grants for certain of our academic research staff.

        In addition, since 2013, we have been entitled to royalty payments from our collaboration partner Sanofi in respect of sales of Lyxumia outside the United States. Following the approval by the FDA and subsequent commercialization by Sanofi, we are also entitled to royalty payments from Sanofi in respect of net sales of Adlyxin and Soliqua100/33 in the United States and Suliqua in the EU. We will generally be entitled to royalty payments on the sales of products that include our product candidates that may ultimately be developed and commercialized under our collaboration and licensing agreements.

        With regard to our multiple component agreements discussed below, where the individual components cannot be separated, revenue is recognized over the period of the agreement. In addition, recognition requires that all material risks and benefits related to the use of our intellectual property included in the collaboration are transferred to the collaboration partner.

        If all risks and benefits have not been transferred, the revenue is recognized as deferred income until all components of the transaction have been completed.

Sanofi License Agreement

        Pursuant to the Sanofi License Agreement, we have granted to Sanofi an exclusive global license of our interests in the patents and know-how required to (i) make, or have made, lixisenatide, together with its salts, prodrugs, metabolites, fragments and other derivatives and (ii) make, or have made, develop, register, market, sell and distribute any pharmaceutical preparation or cell therapy product or other product containing or releasing lixisenatide, in each case, for the prevention of and treatment of type 2 diabetes and any other indication in humans and other species. As part of the Sanofi License Agreement,

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we agreed not to conduct research or development of lixisenatide, nor may we grant any license under the licensed patents and know-how to any party other than Sanofi.

        In 2015, we recognized $20.0 million or DKK 136.6 million in revenue from development milestones from Sanofi under the Sanofi License Agreement in connection with the submission of an NDA for Soliqua100/33 / Suliqua to the FDA. In 2015, we recognized $4.1 million or DKK 28.6 million in royalty income, which reflected net sales of Lyxumia of €38.3 million. In 2016, we recognized $30.0 million or DKK 208.7 million, in revenue from development milestone payments from Sanofi under the Sanofi License Agreement in connection with the FDA approval of Adlyxin and Soliqua100/33 and recognized royalty income from Sanofi of DKK 24.3 million based on sales of Adlyxin / Lyxumia of €32.7 million in 2016.

        In 2016, revenue from Sanofi represented 99% of our total revenue, as compared to 88% in 2015. The increase of the share of total revenue from Sanofi in 2016 was primarily due to the increase in milestone revenue from Sanofi when Adlyxin and Soliqua100/33 were approved by the FDA in July and November of 2016, respectively, as well as the fact that there were no major milestones from other partnerships recognized in 2016.

        See "Business—Material Contracts—Sanofi License Agreement for Lixisenatide."

Boehringer Ingelheim License Agreements

        In June 2011, we entered into an exclusive worldwide license, research and development collaboration agreement with BI, or the 2011 BI License Agreement to advance novel glucagon/GLP-1 dual acting peptide receptor agonists, or GGDAs, for the treatment, prevention and diagnosis of all human and animal diseases, with a primary research focus on patients with type 2 diabetes and obesity. Under the terms of the 2011 BI License Agreement, the term of which was extended by the parties in June 2014 the parties collaborate on a research project related to new GGDA compounds.

        In July 2014, we entered into a separate exclusive worldwide license, research and development collaboration agreement with BI, or the 2014 BI License Agreement, for the development of certain therapeutic peptides. The 2014 BI License Agreement also provides for a research term of up to four and a half years to research a specific therapeutic peptide project from our portfolio of preclinical programs, with the aim of developing one or more novel drugs for the treatment, prevention and diagnosis of all human and animal diseases, with a primary research focus on cardio-metabolic diseases. We were contracted to conduct research activities in accordance with the research plan resulting from the 2014 BI License Agreement, with BI covering research costs up to €3 million. In October 2015, BI selected our novel peptide therapeutic, a long-acting amylin analog, to be advanced into preclinical development under the 2014 BI License Agreement. Pursuant to the 2014 BI License Agreement, we have worked with BI to advance the therapeutic peptides arising from this research collaboration into preclinical development.

        We are eligible to receive amounts in connection with the signature of the 2014 BI License Agreement and development milestones for products now under development of up to €295 million (of which €287 million is outstanding) for the first compound to be developed and marketed under this collaboration. We are also eligible to receive additional milestones, reduced by 50%, in respect of the second and third products advanced under this collaboration, plus tiered royalties in the mid-single to low double-digit percentages on global sales of products arising from this collaboration. We retain co-promotion rights in Scandinavia and are not eligible for royalty payments in those countries if we exercise such rights. The 2014 BI License Agreement continues for as long as BI's royalty obligations continue, unless earlier terminated. Upon expiration, BI has a perpetual non-exclusive right to develop and commercialize the product. Either party may terminate for the other's material breach, insolvency or patent challenge of the other party's patents. BI may terminate the agreement at will upon 180 days' notice.

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        In 2015, we received a €3 million payment from BI, which was recognized by us as DKK 22.4 million in revenue from milestone payments from BI in connection with the selection of a first preclinical product candidate under the 2014 BI License Agreement. In 2016, we recognized no revenue from BI, as no milestone event was reached. No product candidates out-licensed to BI are currently marketed and accordingly, we have not recognized any royalty payments to date under our licensing agreements with BI.

        In 2016, revenue from BI represented 0% of our total revenue, as compared to 12% in 2015. The decrease in the share of the total revenue from BI in 2016 was primarily because we did not recognize any milestone payments in 2016 under these agreements.

        See "Business—Material Contracts—Licensing Agreements with Boehringer Ingelheim."

Protagonist Therapeutics License Agreement

        In 2012, we entered into an agreement with Protagonist Therapeutics, Inc., or Protagonist Therapeutics. This research collaboration was terminated in 2014, however, under the terms of the terminated agreement we are entitled to receive up to $15 million in milestone payments, if certain milestone events occur.

        In 2016, we received DKK 1.6 million in revenue from a milestone payment received from Protagonist Therapeutics in connection with their nomination of a development candidate.

Expenses

Royalty Expenses

        Royalty expenses are comprised of contractual amounts due to third parties that are derived from the milestone payments and royalty income earned from the corresponding collaboration agreements.

        Based on contractual arrangements, we are obliged to make royalty payments to certain third parties calculated based on revenues earned from certain other parties. At the time of the dissolution of a former joint venture that we had with, among others, Elan Corporation plc, or Elan, that is now governed by a termination agreement with Alkermes plc, or Alkermes (as successor in interest to the Elan business), we agreed to pay to Alkermes plc, or Alkermes, royalties of 13% on all revenue related to lixisenatide under the Sanofi License Agreement. In addition, we pay 0.5% of the total amounts we receive in connection with our SIP modified peptides to one of the inventors of our SIP technology. The royalty to be paid to this inventor is calculated on the basis of all amounts we receive, including license payments, milestone payments and sales.

Research and Development Expenses

        Our R&D expenses include internal costs relating to our R&D department as well as external costs relating to studies performed by external suppliers and collaboration partners. A major driver of the external costs are costs for clinical trials run by CROs. During 2015 and 2016, in respect of our internal pipeline, we conducted one Phase 2 clinical trial relating to Danegaptide (a former product candidate that we are no longer advancing), one Phase 2 and two Phase 1 clinical trials relating to dasiglucagon and one Phase 2 clinical trial relating to Glepaglutide, which is still ongoing. We expect to incur increasing costs for clinical trials as our internal product candidates, dasiglucagon and glepaglutide, advance in clinical development.

        As our R&D expenses to date do not qualify for capitalization under IAS 38, Intangible Assets, all of our R&D expenses are recognized in the period in which they are incurred.

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        Our R&D expenses consist primarily of:

    salaries for our R&D staff and related expenses, including expenses related to cash bonuses and warrant programs to such personnel;

    fees paid to contract manufacturers in conjunction with the production of clinical compounds, drug substances and drugs;

    fees and other costs paid to CROs in conjunction with additional preclinical studies and the performance of clinical trials;

    costs of related facilities, equipment and other overhead expenses have been determined to be directly attributable to R&D;

    overhead expenses have been allocated to R&D or administrative expenses based on the number of employees in each respective department, determined based on the respective employees associated undertakings;

    costs associated with obtaining and maintaining patents for intellectual property; and

    depreciation of capital assets used to develop its drug candidates.

        Our R&D expenses may vary substantially from period to period based on the timing of our R&D activities, including timing due to regulatory approvals and enrollment of patients in clinical trials.

Administrative Expenses

        Our administrative expenses consist primarily of salaries for personnel other than R&D staff, including expenses related to cash bonus and warrant programs to such personnel. Also included are expenses related to our premises, operating leases and investor relations. Overhead expenses have been allocated to R&D or administrative expenses based on the number of employees in each respective department, determined based on the respective employees' associated undertakings.

Other Operating Income

        Other operating income is comprised of research funding from business partners and government grants. Research funding is recognized in the period in which the research activities have been performed. Government grants are recognized when there is reasonable assurance that we will comply with the conditions attached to it and that the grant will be received. Government grants are included in other operating income as the grants are considered to be cost refunds.

Financial Income

        Financial income is recognized in the income statement in the period in which they are earned. Financial income includes interest from trade receivables, as well as realized and unrealized exchange rate adjustments.

Financial Expenses

        Financial expenses are recognized in the income statement in the period in which they are incurred. Financial expenses include interest expenses, as well as realized and unrealized exchange rate adjustments. Further, expenses related to the ZP SPV Notes (as defined below) are amortized over the expected duration of the bond and recognized as financial expenses.

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ZP SPV Notes (Royalty Bond)

        On December 12, 2014, our wholly owned subsidiary, ZP SPV, issued $50 million of 9.375% Senior Secured Notes due March 15, 2026, or the ZP SPV Notes. The ZP SPV Notes are non-dilutive, limited-recourse royalty bonds secured by 86.5% of the annual royalty payments from sales of Adlyxin / Lyxumia received under the Sanofi License Agreement. The ZP SPV Notes bear interest at a rate of 9.375% per annum. Pursuant to the terms of the ZP SPV Notes, repayment of amounts due will come from royalty payments received in respect of Adlyxin / Lyxumia with no recourse to future royalty revenue on other out-licensed product candidates, including Soliqua100/33 / Suliqua. The ZP SPV Notes initially required us to maintain a collateral reserve account securing our payment obligations thereunder, and that such collateral reserve account be funded by certain milestone payments related to both Adlyxin / Lyxumia and Soliqua100/33 / Suliqua. On March 15, 2017 we amended the ZP SPV Notes to provide for the redemption of $25 million of the ZP SPV Notes at premium of 103% of the notes being redeemed. The amendment to the ZP SPV Notes provides that, following such redemption, the remaining $25 million will be payable in full on March 15, 2021, subject to early redemption rights and conditions that ZP SPV holds as the issuer of the notes. Following our amendment of the ZP SPV Notes and the concurrent redemption, the remaining $26.2 million held as collateral for the ZP SPV Notes in the collateral reserve account was released to us from Restricted Cash into cash and cash equivalents. Additionally, on March 15, 2017, we issued a guarantee in favor of the trustee and the holders of the ZP SPV Notes, guaranteeing the payment and performance by the issuer of the ZP SPV Notes of the secured obligations (as such term is defined in the indenture governing the ZP SPV Notes) thereunder.

        As of December 31, 2016, we had paid DKK 45.8 million ($6.5 million), or 86.5% from royalties received in 2015 and 2016 in respect of Lyxumia into a collection account to service the payments of principal and interest on the ZP SPV Notes. For the year ended December 31 2016, interest expense on the ZP SPV Notes amounted to DKK 32.2 million ($4.6 million).

        Expenses related to the ZP SPV Notes are amortized over the expected duration of the bond and recognized as financial expenses.

        See "Business—Material Contracts—ZP SPV Notes (Royalty Bond)."

Income Tax Benefit

        Income tax on results for the year, which is comprised of current tax and changes in deferred tax, is recognized in the income statement, whereas the portion attributable to entries on equity is recognized directly in equity.

        Current tax liabilities and current tax receivables are recognized in the statement of financial position as tax calculated on the taxable income for the year adjusted for tax on previous years' taxable income and taxes paid on account/prepaid.

        Deferred tax is measured according to the statement of financial position liability method in respect of temporary differences between the carrying amount and the tax base of assets and liabilities. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.

        Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries, except where we are able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

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        The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

        This judgment is made on an ongoing basis and is based on the factor that recent historical loss carries more weight than factors such as budgets and business plans for the coming years, including planned commercial initiatives. The creation and development of therapeutic products within the biotechnology and pharmaceutical industry is subject to considerable risks and uncertainties. So far, we have reported significant losses, and as a consequence, we have unused tax losses. Management has concluded, that deferred tax assets should not be recognized at December 31, 2016 and 2015. The tax assets are currently not deemed to meet the criteria for recognition as management determined that it was not probable that future taxable profit will be available against which the deferred tax assets can be utilized.

        Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and we intend to settle its current tax assets and liabilities on a net basis.

        Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realized based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date.

        Pursuant to Danish tax legislation for companies incurring R&D costs and tax losses, we are eligible to receive a tax credit. In 2015 we received a tax credit of DKK 5.9 million relating to tax losses in 2015 and are eligible to receive a tax credit of DKK 5.5 million relating to the tax loss in 2016.

        No deferred tax asset has been recognized in the statement of financial position due to an uncertainty as to when and if tax losses can be utilized against future taxable income.

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Results of Operations

Financial Results for the Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016

        The table below sets forth our financial results for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016.

 
  Three Months Ended
March 31,
   
   
 
(in millions, except where indicated)
  2017   2016(1)   Change  
 
  $(2)   DKK   DKK   DKK   %  

Revenue

    11.1     77.6     6.7     70.9     1,058.2  

Royalty expenses

    (1.5 )   (10.5 )   (0.9 )   (9.6 )   (1,066.7 )

Research and development expenses

    (8.7 )   (60.7 )   (63.7 )   3.0     4.7  

Administrative expenses

    (1.4 )   (9.9 )   (7.5 )   (2.4 )   (32.0 )

Other operating income

        0.1     0.9     (0.8 )   (88.9 )

Operating loss

    (0.5 )   (3.3 )   (64.5 )   61.2     94.9  

Financial income

    0.1     0.8     0.8          

Financial expenses

    (3.6 )   (25.2 )   (15.2 )   (10.0 )   (65.8 )

Loss before tax

    (4.0 )   (27.7 )   (78.9 )   51.2     64.9  

Income tax benefit

    0.2     1.4     1.1     0.3     27.3  

Net loss for the period

    (3.8 )   (26.3 )   (77.8 )   51.5     66.2  

Loss per share (DKK)

                               

Basic loss per share

    (0.15 )   (1.03 )   (3.27 )   2.24     68.5  

Diluted loss per share

    (0.15 )   (1.03 )   (3.27 )   2.24     68.5  

(1)
The three months ended March 31, 2016 have been restated for the correction of certain misstatements. See Note 1 to our unaudited condensed consolidated interim financial statements.

(2)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

Revenue

        Revenue for the three months ended March 31, 2017 was DKK 77.6 million ($11.1 million), as compared to DKK 6.7 million for the three months ended March 31, 2016, reflecting an increase of DKK 70.9 million.

        Milestone revenue amounted to DKK 69.6 million (as compared to DKK 0.0 million for the three months ended March 31, 2016), due to a $10 million milestone payment received from Sanofi related to the approval of Suliqua in the EU in January 2017.

        Royalty revenue was comprised of DKK 5.1 million from Sanofi in respect of sales of Lyxumia and Adlyxin under the Sanofi License Agreement (as compared to DKK 6.7 million for the three months ended March 31, 2016) and DKK 2.9 million from Sanofi in respect of Sanofi's first sales of Soliqua100/33 in the United States (as compared to DKK 0.0 million for the three months ended March 31, 2016). See "—Financial Operations Overview—Sanofi License Agreement."

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Royalty Expenses

        Royalty expenses for the three months ended March 31, 2017 were DKK 10.5 million ($1.5 million), as compared to DKK 0.9 million for the three months ended March 31, 2016, reflecting an increase of DKK 9.6 million. Royalty expenses were comprised of royalty payments by us to third parties with respect to milestone payments and royalty payments resulting from the sales of from Lyxumia, Adlyxin, Soliqua 100/33 and Suliqua.

Research and Development Expenses

        R&D expenses for the three months ended March 31, 2017 were DKK 60.7 million ($8.7 million), as compared to DKK 63.7 million for the three months ended March 31, 2016, reflecting a decrease of DKK 3.0 million. R&D expenses for each of the three months ended March 31, 2017 and the three months ended March 31, 2016 consisted mainly of costs related to the clinical development of dasiglucagon (both single and multiple dose formulations) and to glepaglutide for short bowel syndrome, as well as certain other pre-clinical research activities. As of March 31, 2017, we had not capitalized any development expenses, and, accordingly, all expenses had been recognized on the income statement.

        The table below sets forth our R&D expenses for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016.

 
  Three Months Ended
March 31,
   
   
 
(in millions, except where indicated)
  2017   2017   2016   Change  
 
  $(1)   DKK   DKK   DKK   %  

Danegaptide (ZP1609)

    0     0     6.5     (6.5 )   (99.9 )

Glepaglutide (ZP1848)

    1.2     8.3     5.3     3.0     56.8  

Amylin analog (ZP2929)

    0     0.2     3.5     (3.3 )   (93.5 )

Dasiglucagon (ZP4207)

    1.5     10.7     10.4     0.3     2.7  

Preclinical projects

    0     0.3     0.9     (0.6 )   (70.7 )

Total project costs

    2.8     19.5     26.6     (7.1 )   (26.7 )

Staff costs

    3.3     22.7     22.1     0.6     2.7  

Other research and development costs

    1.1     7.8     4.3     3.5     81.7  

Patent expenses

    0.2     1.1     1.1     0     0.4  

Building

    0.3     2.1     2.0     0.1     3.1  

IT and office expenses

    0.3     2.1     1.9     0.2     14.7  

Consultants

    0.1     0.9     1.5     (0.6 )   (39.8 )

Depreciation

    0.2     1.2     1.4     (0.2 )   (18.5 )

Other costs

    0.5     3.5     2.9     0.6     20.3  

Unallocated internal research and development costs

    5.9     41.2     37.1     4.1     11.1  

Research and development costs occurred in the period

    8.7     60.7     63.7     (3.0 )   (4.7 )

(1)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

Administrative Expenses

        Administrative expenses for the three months ended March 31, 2017 were DKK 9.9 million ($1.4 million), as compared to DKK 7.5 million for the three months ended March 31, 2016, reflecting an increase of DKK 2.4 million.

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Information on Staff and Remuneration

        The following table provides information regarding our staff and remuneration for the three months ended March 31, 2017 and 2016.

 
  Three Months
Ended March 31,
   
   
 
(in millions, except where indicated)
  2017   2017   2016   Change  
 
  $(1)   DKK   DKK   DKK   %  

Salaries

    3.3     23.1     23.7     (0.6 )   (2.5 )

Pension Schemes

    0.3     2.2     2.0     0.2     10.0  

Other personnel costs

    0.4     2.6     1.9     0.7     36.8  

Total

    4.0     27.9     27.6     0.3     2.5  

(1)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

        Expenses related to staff and remuneration for the period ended March 31, 2017 were DKK 27.9 million ($4.0 million), as compared to DKK 27.6 million for the period ended March 31, 2016, reflecting an increase of DKK 0.3 million. A total of DKK 22.7 million ($3.3 million) of expenses related to staff and remuneration for the period ended March 31, 2017 was charged to R&D expenses, as compared to DKK 22.1 million for the period ended March 31, 2016. A total of DKK 5.2 million ($0.8 million) of expenses related to staff and remuneration was charged to administrative expenses for the period ended March 31, 2017, as compared to DKK 5.5 million for the period ended March 31, 2016.

Other Operating Income

        Other operating income for the three months ended March 31, 2017 was DKK 0.1 million ($0.0 million), as compared to DKK 0.9 million for the three months ended March 31, 2016, reflecting a decrease of DKK 0.8 million.

Financial Income

        Financial income was DKK 0.8 million ($0.1 million) for each of the three months ended March 31, 2017 and March 31, 2016. Exchange rate adjustments amounted to DKK 0.4 million ($0.1 million) for the three months ended March 31, 2017, as compared to DKK 0.8 million for the three months ended March 31, 2016. Interest income was DKK 0.4 million ($0.1 million) for the three months ended March 31, 2017, as compared to DKK 0.0 million for the three months ended March 31, 2016. In each of the three months ended March 31, 2017 and 2016, interest income was related to interest income on our cash and cash equivalents, as well as our restricted cash.

Financial Expenses

        Financial expenses for the three months ended March 31, 2017 were DKK 25.2 million ($3.6 million), as compared to DKK 15.2 million for the three months ended March 31, 2016, reflecting an increase of DKK 10 million. Exchange rate adjustments amounted to DKK 4.5 million ($0.7 million) for the three months ended March 31, 2017, as compared to DKK 4.9 million in the three month period ended March 31, 2016. Interest expense was DKK 20.7 million ($3.0 million) for the three months ended March 31, 2017, as compared to DKK 10.3 million for the three months ended March 31, 2016. The increase in interest expense in the three months ended March 31, 2017, as compared to the three months ended March 31, 2016, relates mainly to the loss incurred due to the repayment of 50% of the royalty bond in March 2017.

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Income Tax Benefit

        Pursuant to Danish tax legislation for companies incurring R&D costs and tax losses, we received a tax credit of DKK 1.4 million ($0.2 million) as an income tax benefit for the three months ended March 31, 2017, as compared to DKK 1.1 million for the three month ended March 31, 2016, in each case in respect of specified tax losses.

Net Loss for the Period

        As a result of the foregoing, our net loss for the three months ended March 31, 2017 was DKK 26.3 million ($3.8 million), as compared to a net loss of DKK 77.8 million for the three months ended March 31, 2016, reflecting a decrease in net losses of DKK 51.5 million.

Financial Results for the Year Ended December 31, 2016 Compared to the Year Ended December 31, 2015

        The table below sets forth our financial results for the year ended December 31, 2016, as compared to the year ended December 31, 2015.

 
  Year Ended December 31,    
   
 
(in millions, except where indicated)
  2016   2016   2015(1)   Change
2016 v 2015
 
 
  $(2)
  DKK
  DKK
  DKK
  %
 

Revenue

    33.7     234.8     187.7     47.1     25.1  

Royalty expenses

    (4.5 )   (31.5 )   (22.3 )   (9.2 )   41.3  

Research and development expenses

    (38.5 )   (268.2 )   (217.7 )   (50.5 )   23.2  

Administrative expenses

    (7.5 )   (52.5 )   (41.8 )   (10.7 )   25.6  

Other operating income

    0.2     1.7     12.8     (11.1 )   (86.7 )

Operating loss

    (16.6 )   (115.7 )   (81.3 )   (34.4 )   42.3  

Financial income

    0.1     0.6     3.9     (3.3 )   (84.6 )

Financial expenses

    (6.4 )   (44.4 )   (42.4 )   (2.0 )   4.7  

Loss before tax

    (22.9 )   (159.4 )   (119.8 )   (39.6 )   33.1  

Income tax benefit

    0.8     5.5     5.9     (0.4 )   (6.8 )

Net loss for the year

    (22.1 )   (153.9 )   (114.0 )   (39.9 )   35.0  

Loss per share

                               

Basic loss (DKK per share)

    (0.9 )   (6.33 )   (4.94 )   (1.39 )   28.1  

Diluted loss (DKK per share)

    (0.9 )   (6.33 )   (4.94 )   (1.39 )   28.1  

(1)
The year ended December 31, 2015 has been restated per the correction of certain misstatements. See Note 1 to our audited consolidated financial statements.

(2)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

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Revenue

        The following table provides information regarding our revenue by source for the years ended December 31, 2016 and December 31, 2015.

 
  Year Ended December 31,    
   
 
(in millions, except where indicated)
  2016   2016   2015   Change
2016 v 2015
 
 
  $(1)
  DKK
  DKK
  DKK
  %
 

License and milestone revenue

                               

Sanofi-Aventis Deutschland GmbH

    30.0     208.7     136.6     72.1     52.8  

Boehringer Ingelheim International GmbH

    0     0     22.4     (22.4 )   (100 )

Helsinn Healthcare SA

    0     0.1     0.1     0     0  

Protagonist Therapeutics Inc. 

    0.2     1.7     0     1.7      

Total license and milestone revenue

    30.2     210.4     159.1     51.3     32.0  

Royalty payments

                               

Sanofi-Aventis Deutschland GmbH

    3.5     24.3     28.6     (4.3 )   (15 )

Total royalty income

    3.5     24.3     28.6     (4.3 )   (15 )

Total revenue

    33.7     234.8     187.7     47.1     25  

(1)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

        Revenue for the year ended December 31, 2016 was DKK 234.8 million ($33.7 million), as compared to DKK 187.7 million for the year ended December 31, 2015 reflecting an increase of 25% (or DKK 47.1 million) in 2016, as compared to 2015.

        Revenue from milestone payments was DKK 210.4 million ($30.2 million) for the year ended December 31, 2016, as compared to DKK 159.1 million for the year ended December 31, 2015, reflecting an increase of 32% (or DKK 51.3 million) in 2016, as compared to 2015. This increase relates to the FDA approval of Adlyxin and Soliqua100/33 in the United States in July 2016 and November 2016, triggering milestone payments from Sanofi of DKK 33.5 million and DKK 175.2 million, respectively. In October 2015, we recognized DKK 22.4 million in milestone income under the 2014 BI License Agreement and milestone income of DKK 136.6 million in December 2015 in respect of Sanofi's submission of an NDA for Soliqua100/33 / Suliqua.

        Royalty income was DKK 24.3 million ($3.5 million) for the year ended December 31, 2016, as compared to DKK 28.6 million for the year ended December 31, 2015, reflecting a decrease of 15% (or DKK 4.3 million) in 2016, as compared to 2015. The decreases in royalty income was due to decreased sales of Lyxumia and the royalty payments accruing thereon that we became entitled to receive.

Royalty Expenses

        Royalty expenses for the year ended December 31, 2016 were DKK 31.5 million ($4.5 million), as compared to DKK 22.3 million for the year ended December 31, 2015. Royalty expenses for the years ended December 31, 2016 and 2015 were comprised of payments that we made with respect to royalty payments received by us from the sales of Lyxumia and milestone payments received from Sanofi. In addition, royalty expenses for the year ended December 31, 2015 also included payments based on milestone payments received from Helsinn. We pay royalties of 13% on all revenue related to lixisenatide under the Sanofi License Agreement to Alkermes and 0.5% of the total amounts we receive in connection with our SIP modified peptides to one of the inventors of our SIP technology.

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Research and Development Expenses

        R&D expenses for the year ended December 31, 2016 were DKK 268.2 million ($38.5 million), as compared to DKK 217.7 million for the year ended December 31, 2015 reflecting an increase of 23% (or DKK 50.5 million) in 2016, as compared to 2015. The increase in R&D expenses for the year ended December 31, 2016 was primarily related to accelerated development activities, including, in particular, development costs for the Phase 2 clinical trial of dasiglucagon and toxicology studies in respect of glepaglutide, as well as increased personnel costs. The R&D share of the personnel expenses for the year ended December 31, 2016 amounted to DKK 109.5 million ($15.5 million), as compared to DKK 94.4 million for the year ended December 31, 2015, reflecting an increase of 16.0% (or DKK 15.1 million) in 2016, as compared to 2015. The increase in R&D share of the personnel expenses in the year ended December 31, 2016, as compared to the year ended December 31, 2015, was primarily due to an increase in the number of employees in the R&D function.

        In 2016, there were R&D expenses of DKK 5.0 million in respect of ZP2929, as compared to development costs of DKK 3.3 million in 2015. A decision was made by BI in 2016 to allow the IND for ZP2929 to become inactive and to cease development efforts for this product candidate.

        As of December 31, 2016 and 2015, we have not capitalized any development expenses, and, accordingly, all such costs have been recognized within the income statement.

        Our R&D expenses for the years ended December 31, 2016 and 2015 are shown in the following table.

 
  Year Ended December 31,    
   
 
(In thousands, except where indicated)
  2016   2016   2015(1)   Change
2016 v 2015
 
 
  $(2)
  DKK
  DKK
  DKK
  %
 

Danegaptide

    1.2     8.5     9.5     (1.0 )   (11 )

Glepaglutide

    3.8     26.8     14.2     12.6     85  

ZP2929

    0.7     5.0     3.3     1.7     51  

Dasiglucagon

    6.8     47.3     29.7     17.6     59  

Preclinical projects

    0.7     5.1     6.8     (1.7 )   (25 )

Total project costs

    13.3     92.7     63.5     29.2     46  

Staff costs

    15.7     109.5     94.4     15.1     16  

Other Research and development costs

    3.4     23.6     19.7     3.9     20  

Patent expenses

    0.9     6.2     5.4     0.8     15  

Building

    1.1     8.1     8.2     (0.1 )   (1 )

IT & office expenses

    1.1     8.1     7.5     0.6     8  

Consultants

    0.5     3.9     2.7     1.2     44  

Insurance on clinical studies

    0.0     0.1     0.1     0.0      

Depreciation

    0.7     5.3     6.0     (0.7 )   (12 )

Other costs

    1.5     10.8     10.3     0.5     5  

Unallocated internal research and development costs

    25.2     175.5     154.3     21.3     14  

Research and development costs incurred in the period

    38.5     268.2     217.7     50.5     23  

(1)
The year ended December 31, 2015 has been restated per the correction of certain misstatements. See Note 1 to our audited consolidated financial statements.

(2)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.96 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2017.

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Administrative Expenses

        Administrative expenses for the year ended December 31, 2016 were DKK 52.5 million ($7.5 million), as compared to DKK 41.8 million for the year ended December 31, 2015, reflecting an increase of 25.6% (or DKK 10.7 million) in 2016, as compared to 2015.

        The increase in administrative expenses in the year ended December 31, 2016 was primarily related to increases in the number of employees and costs of external consultants.

Information on Staff and Remuneration

        The following table provides information regarding our staff and remuneration for the years ended December 31, 2016 and 2015.

 
  Year Ended December 31,    
   
 
(in millions, except where indicated)
  2016   2016   2015   Change
2016 v 2015
 
 
  $(1)
  DKK
  DKK
  DKK
  %
 

Salaries

    15.0     104.6     89.5     15.1     16.9  

Pension schemes

    1.2     8.2     7.2     1.0     13.9  

Other payroll and staff related costs

    4.7     32.8     26.6     6.2     23.3  

Total

    20.9     145.7     123.3     22.3     18.2